Make PowerPoint slides for the presentation. Notes: make 5 slides with mains keywords Taking into consideration the
Question:
Make PowerPoint slides for the presentation. Notes: make 5 slides with mains keywords
Taking into consideration the money market and the general macroeconomic environment, the central bank has chosen to maintain an expansionary monetary policy in the second half (H2) of the current fiscal year (FY), with minor modifications. In reaction to the govt's lower forecast of GDP growth, Dr. Rahman said the central bank intends to make comparable adjustments to its monetary policy. Because of the ongoing Covid-19 outbreak, the government has already lowered its GDP growth estimate for FY21 from 8.20 percent to 7.40 percent. The target for the country's entire money supply, as measured by broad money (M2), is expected to be lowered by 0.60 percent to about 15 percent in June, down from 15.60 percent before, according to officials. M2 is a metric of a country's total amount of money, which includes the highly liquid and far less liquid money. In December 2020, M2 development was 14.21 percent, contrary to BB's prior target of 14 percent. In order to minimize the danger of rising inflation on the economy, they also said the reserve money (RM) target will be lowered in line with the rise in revised M2. They also said that credit growth targets for the public sector, particularly public debt owed by banks, are expected to decrease in the second half of FY21, while credit growth targets for the private sector are expected to remain steady. Such modifications to the monetary strategy for the second quarter of FY21 will be announced in a press release on Monday. The BB's new actions come in response to a rising trend in excess money in circulation in recent months, after decreased private sector loan growth. Due to slower private sector credit expansion caused by supply chain interruptions during the current coronavirus outbreak, bank excess cash hit a total high of Tk 2.04 trillion in December 2020, according to bankers and experts. Loan flow to corporate companies rose 8.37 percent year over year in December, down versus 9.20 percent in July 2020 of the preceding calendar year. This rise was 3.13 percent lower than the BB's target of 11.50 percent for the very first half of the current fiscal year (H1). The introduction of the coronavirus vaccine, on the other hand, is anticipated to restrict the spread of the fatal virus in the nation, increasing people's trust in economic operations, according to central bank officials. For the second quarter of FY21, the BB has chosen to keep the private industry loan growth target at 14.80 percent. They said that the govt's stimulus initiatives, along with the Federal Reserve's continued expansionary monetary policy, had boosted banking sector liquidity. The government has initiated a total of 23 stimulus programs worth Tk 1.24 trillion to offset the shock of the Covid-19 outbreak in various areas of the country. The packages, worth 4.44 percent of GDP, are really being implemented under the supervision of the financial system and the finance minister. According to Mustafa K. Mujeri, executive director of the Department for Equitable Finance and Development, new loan demand, particularly from the private sector, will help reduce the amount of excess liquidity in the banking system (InM). Dr. Mujeri, a previous BB chief economist, also stated that the central bank will make changes to its different monetary program indicators in light of the government's revised GDP growth projection. "It would be very hard to achieve the credit to the private industry growth target if it is not expected to rise that a double expansion even by March 2021," Syed Mahbubur Rahman, former chairman of the Association of Bankers of Bangladesh (ABB), said while explaining the situation. As for keeping with its expansionary policy position, the BB lowered the overnight sales agreement (repo) rate by 50 basis points to 4.75 percent, while lowering the reverse repo rate to 4.00 % from 4.75 %. The central bank cut interest rates to ensure that banks have cheap cash while more money is flowing into the economy. In addition, the bank rate was cut from 5.0 percent to 4.0 percent to bring it in line with the current interest rate regime.
Bangladesh's fiscal policy involves indicators taken by the government to acquire and use resources in order to provide services while ensuring that economic units operate at maximum efficiency. The policy affects the decision of economic forces via public financing. Bangladesh's fiscal policy is to preserve macroeconomic stability, promote economic growth, and establish a system of the equitable income distribution. The main means for accomplishing these objectives are variance in public revenue, variation in public expenditure, and debt management. The government's financial actions, which are designed and implemented year after year, reflect this. After Bangladesh gained independence, the state was obliged to spend a large part of its assets on reconstruction and rehabilitation. It had a low level of private investment and a negative public savings rate. Despite substantial foreign aid inflows, the government's main concern was the growing budget gap. A succession of unforeseen events aggravated the situation. As a consequence, during the 1970s and 1980s, government budgetary strategies were mainly focused on mending the war-torn sector and stabilizing this against various shocks. Over time, this has culminated in a weaker fiscal framework and insufficient budgetary management. Any tax increase as a consequence of the built-in impacts of economic growth was virtually impossible due to the tax structure. This was attributable to the fact that, notwithstanding the economy's moderate growth, income distribution was uneven, resulting in an annual increase in the number of people living in poverty. As a consequence, the proportion of people with a taxable surplus has declined over time. Moreover, 80% of total tax income came from indirect taxes, with import duties accounting for about 60% of it. Import tariffs were difficult to increase since the bulk of imports were for the government and fulfilled basic requirements. Due to socioeconomic limitations, most public goods pricing was yet to be rationalized despite rising production costs. As a result, they were kept at a low level, resulting in inadequate cost recovery. Current expenditure was virtually always overestimated, while current surpluses, foreign loans, and subsidies have been almost always exaggerated. As a consequence, the overall budget deficit changed dramatically over time. The overall picture indicates that past fiscal policies were inadequate for 'fine-tuning' the economy towards macroeconomic stability and increased growth. Regular deficit financing, typically via borrowings from abroad, the Bangladesh Bank, and scheduled banks, has long been a mainstay of the country's fiscal policy. Due to the people's low savings capacity, the state's cost of borrowing from the public to fund its budget deficit is extremely limited in the country. As a consequence, there are no non-inflationary options for funding the budget deficit in this country. The availability of foreign borrowing is determined by the country's international liquidity position and present global capital market circumstances, which are continuously unexpected and volatile for a country like Bangladesh. Due to the possibility of central bank refinancing, financial institutions are also inefficient sources of non-inflationary lending. One the circumstances, a part of the budget deficit cannot be paid via foreign financing and must instead be funded through central bank borrowing, regardless of the size of the deficit in any given year. As a result, Bangladesh's budget shortfall has gotten so large that borrowing from the Bangladesh Bank by the government has become inevitable after a deficit has also been incurred. In the early 1990s, Bangladesh's government took a number of significant ways to increase the country's fiscal position. The government's fiscal policy objective was to maintain current expenditure growth below that of nominal GDP, freeing up additional resources to finance the annual development program (ADP) that was executed each year. In line with the IMF's Additional Debt Restructuring Facility (ESAF), a number of reforms were made, the most important of which was the introduction of taxes (VAT) in July 1991. VAT was imposed at a consistent rate of 15% at the manufacturing/import level. This system largely superseded the old framework of differential import sales taxes and municipal excise taxes, as well as protection-neutral supplementary levies. The addition of leisure allowances throughout the tax base, the exclusion of investment in permitted assets from the tax base, and the introduction of a withholding tax on profits with a reasonable limitation on special expenditures were the major developments in personal income tax. Interest rates on national savings instruments, as well as subsidies for food and jute, have been cut. A significant number of public sector businesses were denationalized by selling to the private sector.
As a result of these changes, Bangladesh's financial situation improved significantly after 1990. The rate of growth in total spending was maintained below that of GDP growth. As a consequence of tax reform, government revenues rose from less than 10% of GDP in the fiscal year 2020-2021 to 11% in the fiscal year 2019-2020. Tax revenues have grown to more than 12% of GDP by the financial year 1994-95. This pattern is still present, although with minor peaks and troughs. Furthermore, changes inside the country's tax structure followed, as shown by a reduction in the percentage of import duties in tax income during the next decades and an increase in the amount of net profit tax in tax income. As a result, the country's shortage of local funds, which had previously hindered project execution and limited its intellectual capital for project support, has been significantly relieved. The country's financial results revealed that the government's budgetary performance had improved. The overall budget deficit in the 1980s was 8.4% of GDP, but it dropped to 5.9% in 1991-92, providing the administration some breathing space. In 1997-98, the budget shortfall was successfully managed at less than 6%, significantly helping the economy's stabilization. The next year, however, due to the devastating and long-lasting floods that occurred in the first half of 1998-99, it could not be sustained. The government's expenditure plan was thrown off by the floods, and revenue collection fell considerably short of projections. As a result, the overall budget deficit in the fiscal year 1998-99 rose to 7.8%. Despite the ongoing plans, the overall deficit remained at slightly over 6% in 1999-2000. Up until 1989-90, foreign aid covered the bulk of Bangladesh's fiscal deficit. The financial sources for filling the budget shortfall have changed significantly since then. Domestic resources will only be able to cover 15% of the deficit in 2019. However, the equivalent figures for covering the budget deficit from domestic and foreign sources in FY 2020-2021 were 47 percent and 53 percent, respectively. Nevertheless, this is also partly to blame for a drop in the inflows of international money during favorable times. Because of a growing dependence on local funds, the budgetary program's implementation has become less unpredictable. However, as a consequence of domestic borrowing, the likelihood of increasing interest rates has increased. Supporting economic and monetary reforms has helped mobilize domestic resources. In recent fiscal years, budgetary allocations have been increased, with an emphasis on human resource management, poverty reduction, investment in education, healthcare, and family planning, and extending the safety net network. The fiscal policy seeks to ensure macroeconomic stability and rapid economic growth by bridging the gap between revenue earning and spending. The macro-level Mid-Term Plan was released, and attempts were made to adopt it in order to modernize and standardize the implementation process. The Mid-Term Budgetary Framework is what it's called (MTDF). The World Bank is funding a five-year effort to enhance the whole management program of the government's revenue expenditure. The completion of this project is expected to result in substantial changes in fiscal policy, as well as advances in revenue management. These reforming metrics have started to have positive effects. The tax system has already been overhauled, and new income streams have been identified. All of these measures have resulted in a boost in tax income. As a result, the tax-to-GDP ratio jumped from 8.47% in 2019-2020 to 11.57% in 2020-2021. Untaxed revenue profits have increased as well, increasing from 1.80% in 1999-2000 to 2.80% in 2009-10. This is reflected in the budget assistance, which shows that despite increasing allocation over time, a balance between allocation and expenditure has been maintained. It's worth mentioning that the budget deficit remained below 5% of GDP through 2010, apart from 2008.
Fundamentals of Thermal-Fluid Sciences
ISBN: 978-0078027680
5th edition
Authors: Yunus A. Cengel, Robert H. Turner, John M. Cimbala