FY21 is the fiscal year from July 2020 to June 2021.
NSCs were introduced in the subcontinent in 1944 by the National Savings Institute of the Ministry of Finance of India. The intent was to promote savings among the population and finance the government’s budget deficit. Currently, the Department of National Savings under the Bangladesh Ministry of Finance issues NSCs.
Effective FY20, the authorities digitized the issuance of NSCs and linked it to the purchasers’ tax identification number to enforce the existing cap on their issuance and increased the tax on interest income from 5 to 10 percent. This resulted in a decline in NSC issuance in FY20 by around 70 percent compared to FY19. NSC issuance in FY21 rebounded driven by the exceptional remittance inflows and the increase in the spread between the deposit rate and the NSC rate.
The total external PPG debt includes US$50.9 billion central government debt, US$1.268 billion IMF debt (including RCF/RFI), and US$8.2 billion guaranteed commercial debt, US$2.0 billion of short term debt.
Trade credits include the difference between the customs record and the actual transaction record, which are settled in the short term.
As of February 2, 2022, around 36 percent of total population have received their second dose. The authorities aim to vaccinate 70 to 80 percent of total population by early 2022.
In November 2021, the Bangladesh Bureau of Statistics (BBS) released a rebased series of national accounts (base year 2015/16). The rebasing has led to an increase in GDP levels and a slight decline in GDP growth rates, partly reflecting wider coverage of economic activities and methodological changes. For instance, FY20 GDP at current prices is 15.7 percent higher, while real GDP growth rate is 0.06 percentage point lower, compared to the existing data (base year 2005/06). BBS is finalizing the underlying balanced supply and use tables (SUTs) and working on producing back-casted historical GDP series. In the absence of full data, the DSA uses the 2005/06 base year GDP
In the medium term budgetary framework, the authorities growth assumptions underpinning revenue projections are more optimistic.
The slowdown in the remittance inflows was expected, as the number of expatriate workers going abroad declined in 2021 amid the ongoing pandemic.
Note, for external debt the only exception is the assumption of sovereign commercial borrowing at 9 percent rate assuming authorities will access the market. The export import bank of NPC debt is assumed at 3.18 percent rate as in RCF/RFI. The T bill rates are very low 1.5–6.0 percent range (91 day- 10 year) in FY21 likely reflecting the excess liquidity in the system. These rates were in the 7–9 percent range in FY20 and assumed to revert.
The CPIA score, which determined the debt carrying capacity until April 2019, was revised down slightly, and was one of the key drivers of change in CI and country classification. Starting 2019 the CPIA was lowered to 3.10 from 3.38 in 2015 and projected to stay at 3.10 thereafter.
Changes in a country’s classification would require two consecutive signals where country’s CI exceed its classification cut-off. The cut-off are greater than 2.69 and lower than 3.05 for medium CI rating.
Per BB’s end year balance of payments data, disbursements of short-term debt of US$1,142 million in FY20 and US$2,064 million in F21 are included in PPG debt. These were assumed zero in the June 2020 RCF/RFI report.
A World Bank (2016) study, Bangladesh: Building Resilience to Climate Change, estimated that that with a per capita GDP of about $1,220, the economic losses in Bangladesh over the past 40 years were an about $12 billion, depressing GDP annually by 0.5 to 1 percent.