Month: February 2023

Indian Prime Minister Narendra Modi’s government presented to Parliament on Wednesday an annual budget of $550 billion that calls for ramping up capital spending by 33% to spur economic growth and create jobs ahead of a general election next year.

Finance Minister Nirmala Sitharaman said private investment was rising after the pandemic and the government should focus on driving growth.

India’s economy is projected to grow 7% in the fiscal year ending in March. The government forecasts growth of 6%-6.5% next year.

The country's population is expected to overtake China's in size this year, and its economy last year surpassed that of the United Kingdom to become the world's fifth largest.

But despite steady economic growth, the Modi government has struggled to quash unemployment concerns and is under pressure to generate enough jobs, especially as it faces key state polls this year and a general election in 2024, which it is favored to win.

“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation,” Sitharaman said.

According to the Center for Monitoring Indian Economy, the unemployment rate stood at 8.3% in December, up from 6.5% in January 2022.

The government is aiming for a budget deficit of 5.9% of India's gross domestic product for the 2023-24 financial year, lower than the 6.4% for this fiscal year.

Despite worries that the world economy is headed for a slump, the finance minister she was confident the country's future was bright. “India is on the right track,” she said.

India raises interest rate to 5.4%, in 3rd hike since May

Apart from raising capital spending on construction of schools, airports, heliports and other infrastructure to $122 billion, the budget extended a $24 billion scheme to provide free grains to vulnerable households for one year.

The government will also increase by 66% its spending on providing affordable housing to the urban poor, Sitharaman said, and prioritize “green growth” with a $4.3 billion investment towards helping India meet its goal of going carbon neutral by 2070.

The budget also announced new tax relief measures aimed at bringing some respite for India's large middle class. But it slashed spending by 30% on India's rural jobs program, a boon for the country's most vulnerable, triggering criticism from activists and the opposition.

On Wednesday, Modi praised the budget as laying a strong “foundation for the aspirations and resolutions of a developed India," and said the government's investment into infrastructure has increased by more than 400% since 2014 when he first became prime minister.

Sitharaman's budget speech was briefly interrupted by opposition lawmakers chanting “Adani, Adani,” after a tussle between Indian billionaire Gautam Adani and a U.S.-based short-seller dominated headlines this week.

Political opponents have urged India's market regulator to investigate Adani after the short-selling firm accused his conglomerate of stock market manipulation and accounting fraud. The allegations led investors to dump Adani-related shares, wiping out tens of billions of dollars worth of market value for his business empire.

Critics of the 60-year-old billionaire say his rise has been boosted by his apparent close ties to Modi. The Adani Group has denied the allegations.

The budget requires approval from both houses of Parliament, but it is bound to be enacted as Modi's party holds a strong majority.

Source: United News of Bangladesh

Europe's inflation rate dipped at the start of the year, giving some relief to consumers but still leaving them facing higher prices that have driven protests and will likely press the European Central Bank into another interest rate hike Thursday.

The consumer price index for the 20 countries that use the euro currency reached 8.5% in January compared with a year earlier, European Union statistics agency Eurostat said Wednesday. That's down from the annual rate of 9.2% in December.

It's the first report on consumer prices that includes data from Croatia, which joined the eurozone on Jan. 1, but lacked unavailable figures from Germany, Europe's biggest economy. Inflation in Europe has now slowed for the third month in a row, falling from a record high of 10.6% in October.

Food and energy prices are persisting as the major factors driving up European inflation. Prices for food, alcohol and tobacco rose at a 14.1% annual pace in January, while energy prices rose 17.2%.

Russia's war in Ukraine has shaken up food and energy markets, and while commodity prices have fallen from all-time highs last year, consumers are not yet seeing relief on their utility and grocery bills.

Natural gas prices have dropped from records last summer thanks to a scramble to find supplies outside Russia and warmer winter weather that eased energy demand for heating. While Europe may have dodged fears of energy rationing and shortages after Russia cut off most supplies, natural gas prices are still three times higher than before Russia started massing troops on Ukraine’s border.

The energy upheaval has made the cost-of-living squeeze more painful in continental Europe and the United Kingdom than in the U.S., leading to protests and strikes from workers in several countries seeking pay that keeps pace with inflation.

U.S. annual inflation dropped to 6.5% in December, while the U.K. reading of 10.5% signaled how the British economy was a striking exception to the International Monetary Fund's brighter outlook for 2023.

Europe's inflation slows again but cost of living still high

In the eurozone, so-called core inflation, which doesn't include volatile food and energy costs, held steady at 5.2% last month, underlining how prices also are rising for both services and goods such as clothing, appliances, cars and computers.

Germany’s inflation number wasn’t available because of a technical issue so an estimate was used. Economists said that means the inflation figure should be taken with a pinch of salt.

Still, “when it comes to monetary policy, this is just noise,” Jack Allen-Reynolds of Capital Economics said in a report. “The core inflation rate is sending a clear signal: underlying price pressures remain strong.”

With inflation far above its target of 2%, the ECB has been raising interest rates that make it more expensive for consumers to borrow money. Aiming to get price spikes under control, the central bank is expected to institute another half-point hike Thursday.

That will come a day after a decision by the U.S. Federal Reserve and the same day the Bank of England acts on borrowing costs.

The central bank moves to cool inflation also strain the economy, with Europe eking out just 0.1% growth in the final three months of last year and 3.5% for all of 2022. That outpaced the 2.1% expansion in the U.S. and China’s 3% growth last year.

Source: United News of Bangladesh

Bangladesh Bank (BB) has simplified the process of receiving foreign currency earned by providing services to foreign institutions, according to a circular issued by the central bank.

From now on, there is no need to fill up paper forms to bring the income earned in exchange for services. It can be brought by only online declaration, said the circular issued on Wednesday. It also makes it easy to receive dollar income from freelancing and other services.

Bangladeshi expatriates do not need to fill up or declare any forms to send income or remittances, the circular by the Foreign Exchange Policy Department of the central bank said.

The instructions were sent to the Authorised Dealers (ADs) adding that transactions can be done by declaring online to bring remittances by using an 'app' in the Internet banking system.

BB set to announce new monetary policy

Later, the printed form of the electronic declaration must be signed by the customers within 30 days. After filling up the form and submitting it directly, foreign currency had to be brought, it said.

Source: United News of Bangladesh

According to tax records obtained by The Guardian, in the two years following a ruthless junta’s takeover of Myanmar, some of the largest oil and gas service companies in the world have continued to profit handsomely from projects that have supported the military government.

The United Nations’ special rapporteur on Myanmar said that since the military took over in February 2021, it is “committing war crimes and crimes against humanity daily.”

According to the Assistance Association for Political Prisoners, more than 2,940 individuals have been slain, including children, pro-democracy activists, and other civilians, The Guardian report adds.

In the midst of this unrest, it appears that US, UK, and Irish oil and gas field contractors – who offer vital drilling and other services to Myanmar’s gas field operators – continued to make millions of dollars in profit in the nation after the coup. This information comes from leaked Myanmar tax records and other reports.

Investigative journalism organization Finance Uncovered, The Guardian, and the Myanmar advocacy group Justice for Myanmar all conducted analyses of the records after they were obtained by the transparency non-profit Distributed Denial of Secrets.

The documents indicate that, in some cases, the subsidiaries of major US gas field service companies continued to operate in Myanmar despite the US State Department’s warning that there were significant risks associated with doing business there in January of last year. This included working with state-owned companies that financially support the junta, like the national oil and gas company Myanma Oil and Gas Enterprise (MOGE).

International community urged to support all efforts to hold Myanmar military responsible for HR violations, abuses

More Myanmar-related sanctions were issued by the US, UK, Australia, and Canada on Tuesday, including those affecting the managing director and deputy managing director of MOGE. However, they refrained from sanctioning MOGE specifically.

In view of the “intensifying human rights violations in Myanmar” and the “substantial resources” MOGE offers the junta, the European Union was the first region to issue penalties against MOGE itself in February.

European businesses are unable to participate in oil and gas field development projects in Myanmar due to EU sanctions. However, such regulations have not yet been implemented by the US or the UK, and such work, which may involve transactions with MOGE directly or indirectly, is not forbidden, The Guardian reports.

According to The Guardian, tax documents that were leaked reveal:

-- The Singapore-based company of US oil services firm Halliburton, Myanmar Energy Services, recorded pre-tax earnings of $6.3 million in Myanmar for the year ending in September 2021, which included eight months when the junta was in power.

-- In the six months leading up to March 2022, Baker Hughes, an oil services business with headquarters in Houston, recorded pre-tax profits of $2.64 million in Myanmar.

-- In the fiscal year that ended in September 2021, the US company Diamond Offshore Drilling recorded $37 million in fees, followed by another $24.2 million from October 2021 to March 2022.

The involvement of western gas field contractors in Myanmar's gas and oil business after the coup, according to activists, renders them complicit in the junta's aggressive campaign.

Both US-based Chevron and France’s Total, which have long been criticized for running gas projects there, announced last January that they were leaving Myanmar.

The US has imposed sanctions on Myanmar’s state-owned gems, pearl, and timber sectors, but Myanma Oil and Gas Enterprise, a key in the junta’s main source of foreign income, is still unaffected, according to The Guardian report.

Source: United News of Bangladesh

The country’s banking sector leaders on Wednesday urged Bangladesh Bank’s Governor Abdur Rauf Talukder to resolve the ongoing dollar crisis in the market to facilitate LC opening by importers ahead of Ramadan.

Chairmen of 11 banks under the Bangladesh Association of Banks (BAB) joined a meeting with the Governor when they discussed how they can work together to deal with the crisis that is seriously hurting imports of both daily essential items and industrial raw materials.

Chairman of BAB and Exim Bank Nazrul Islam Majumder led the team.

After the meeting, BB spokesperson Mazbaul Haque said that the leaders of the BAB told the Governor that they could not open LCs due to dollar shortage.

Rice, wheat import: Bangladesh Bank asks banks to keep minimum LC margin

He said that they urged to solve the problem immediately to ensure asmooth supply of essential goods during holy Ramadan. The leaders also sought dollar support for the imports of industrial raw materials, he said.

“Many banks are unable to open LCs due to the dollar crisis. So, if the traders cannot open LCs now, it will not be possible to import goods for Ramadan,” he said.

They fear that unscrupulous traders may increase prices of goods by showing a short supply of goods, the spokesperson said.

Source: United News of Bangladesh