Money and Credit

Money a current medium of exchange in the form of coins and banknotes; coins
and banknotes collectively.
Money is any item or verifiable record that is generally accepted as payment for
goods and services and repayment of debts, such as taxes, in a particular country
or socio-economic context.
The main functions of money are distinguished as:
• A medium of exchange,
• A unit of account,
• A store of value
• A standard of deferred payment.
Any item or verifiable record that fulfills these functions can be considered as
money.
At last we can say that,
Money is any item or electronic record that can be used for the purchase of
goods, provide a store of account, and can be used as a medium of exchange.
 Money and Credit
Credit means, the ability of a customer to obtain goods or services before
payment, based on the trust that payment will be made in the future.
Credit is any form of deferred payment. For example, if you purchase on a credit
card – a bank effectively pays on your behalf – anticipating you will pay back the
amount to the credit card company in six weeks time.

The key difference between cash and credit is that one is your money (cash) and
one is the bank's (or someone else's) money (credit). When you pay with credit,
you borrow money from someone else to pay. Usually this money does not come
for free.
Money and Credit
 Money and Credit situation in Bangladesh
Cash crisis grips most banks.

Bangladesh Bank (BB) ( middle august of 2019) announced its monetary policy for the
second-half (H2)of the current fiscal year (FY2018-19), reducing private sector credit
growth to 16.5%.

At the end of February 2019, the year-on-year reserve money and narrow money (M1)
have decreased, however broad money (M2) have increased compared to the same
month of the previous fiscal year. Due to robust growth in government and private sector
credit, the broad money (M2) growth increased notably. On the other hand, Due to
significant decrease in the growth of currency notes and coins with the public as well as
demand deposit, the year-on-year growth of narrow money (M1) declined in FY2017-18
compared to FY2016-17.
 Money and Credit situation in Bangladesh
Money and credit show the real economic situation in any country. It depends on
1) Reserve money and broad money
2) Internal credit
View Bangladesh's Domestic Credit Growth from Jul 1988 to Dec 2020
in the chart:
 Rate of Interest
Interest rates are some of the most powerful and influential components of any economy.
The interest rate is the amount charged on top of the principal by a lender to a borrower
for the use of assets.
An interest rate is the percentage of principal charged by the lender for the use of its
money.
The benchmark interest rate in Bangladesh was last recorded at 6 percent. Interest Rate in
Bangladesh averaged 7.02 percent from 2008 until 2019, reaching an all time high of 8.75
percent in September of 2008 and a record low of 4.50 percent in October of 2009.

Types of interest rate

1. Fixed Interest
2. Variable Interest
3. Annual Percentage Rate (APR)
4. The Prime Rate
5. The Discount Rate
6. Simple Interest
7. Compound Interest
 Rate of Interest

The benchmark interest rate in Bangladesh was last recorded at 4.75 percent.
 Capital Market

The part of a financial system concerned with raising capital by dealing in shares, bonds,
debentures and other long-term investments.
Capital markets are composed of primary and secondary markets. The most common capital
markets are the stock market and the bond market.
Capital markets, Short-term securities are traded elsewhere, such as in the money market.
Examples of highly organized capital markets are the New York Stock Exchange, American
Stock Exchange, London Stock Exchange.
Aims of capital market:-
1.Mobilization of savings to finance long term investments. 2.Facilitates trading of securities.
3.Minimization of transaction and information cost. 4.Encourage wide range of ownership of
productive assets. 5.Quick valuation of financial instruments like shares and debentures.
Bangladesh capital market is one of the smallest in Asia but the third largest in the south
Asia region. It has two full-fledged automated stock exchanges namely Dhaka Stock
Exchange (DSE) and Chittagong Stock Exchange (CSE).

Objectives:-
• Develop a platform for entrepreneurs for raising capital;
• Provide an investment opportunity for small and large investors;
• Develop a transparent market ensuring investor’s interest;
 Capital Market

Declining performance in the past leading to reduced confidence in the present:

 Capital Market

COVID-19 worsening the already worsened mood of investors

The first COVID-19 case in Bangladesh was announced on March 8. The announcement
caused a huge drop in investors’ confidence as they became uncertain about the country’s
economy.
 External Sector

The external sector of the economy refers to the international transactions that all residents of the
country (private and public sector) conduct with the rest of the world.

In other hand, The external sector is the portion of a country's economy that interacts with the
economies of other countries. In the goods market, the external sector involves exports and imports.
In the financial market it involves capital flows.
External Sector , its have two parts
1. Export

2. Import
External factors such as export, import, remittances and foreign aid have always played important
role Bangladesh’s economy, though the relative importance of various external factors has changed
over time. So important to analyze the trend, structure and changing features of the external sector
of Bangladesh. Based on the past performance and changes in the global economy, the study has
projected the growth prospect and likely behavior of Bangladesh’s external sector under three
scenarios: (i) optimistic scenario (8% GDP growth per annum), (ii) business as usual scenario (6% GDP
growth per annum), and (iii) base case scenario (4% GDP growth per annum).
 Exports
It means send (goods or services) to another country for sale.
An export is something that is shipped or brought to another country to be sold or traded.
Exports are a crucial component of a country’s economy, as the sale of such goods adds to
the producing nation's gross output.
One of the oldest forms of economic transfer, exports occur on a large scale between nations
that have fewer restrictions on trade, such as tariffs or subsidies.
Export businesses are mainly classified into:-
• Export-traders
The export-traders include the export companies known as trading houses, trading
companies, buying offices, buying agents, purchasing agents, resident buyers, sourcing
agents, export representatives, export distributors, export agents, export management
companies, and manufacturers' representatives.
• Export-manufacturers
Export-manufacturers include the manufacturers, producers, assemblers and processors of
export goods.
• Service-exporters.
Service-exporters include the banks, ocean shipping (steamship) companies, air cargo
companies or airlines, trucking companies, rail carriers, insurance companies, freight
forwarders or consolidators, consulting firms, and miscellaneous service companies. Service-
exporters provide services to export-traders and export-manufacturers.
 Export position of Bangladesh

Exports in Bangladesh increased to 245.62 BDT Billion in November from 242.23 BDT
Billion in October of 2020. source: Bangladesh Bank

Bangladesh is world’s second-biggest apparel exporter after China. Garments including knit
wear and hosiery account for 80% of exports revenue; others include: jute goods, home
textile, footwear and frozen shrimps and fish.
 Imports

Imports means bring (goods or services) into a country from abroad for sale. An import is a
goods or services brought into one country from another. The word "import" derives from
the word "port" since goods are often shipped via boat to foreign countries. Along with
exports, imports form the backbone of international trade. If the value of a country's imports
exceeds the value of its exports, the country has a negative balance of trade (BOT), also
known as a trade deficit.

Nature of Import:
1. Imports are goods or services brought into one country from another country.
2. Countries are most likely to import goods or services that their domestic industries
cannot produce as efficiently or cheaply as the exporting country.
3. Free trade agreements and tariff schedules often dictate which goods and materials are
less expensive to import.
4. Economists and policy analysts disagree on the positive and negative impacts of imports.
There are two basic types of import:
• Industrial and consumer goods
• Intermediate goods and services
 Import Position of Bangladesh
Imports in Bangladesh increased to 351.73 BDT Billion in November from 319.85
BDT Billion in October of 2020. source: Bangladesh Bank
 Foreign Employment and Remittance
Going from one country to another country for job and to earn money is called foreign
employment.
Foreign employment is thus an important and stable source of foreign currency inflow to
the country. Overseas job opportunities continue to be a vital source of employment,
reducing the pressure on authorities on account of the unemployment issue in the
country, especially among the unskilled females and youths.
A remittance is a payment that gets sent somewhere else. To "remit" is to send money or
make a payment and what we send is called remittance.
A “foreign remittance” is an exchange of cash from a vagrant specialist to their families or
different people in their nations of origin.
There are two types of foreign remittances —
Outward remittance and
Inward remittance.
Outward Remittance: It is applicable for the sending nation, where the paid worker is
based.
Inward Remittance: it is applicable for the nation that receives the money.
 Foreign Employment and Remittance of Bangladesh

Remittances in Bangladesh decreased to 2050.65 USD Million in December from

2078.74 USD Million in November of 2020. source: Bangladesh Bank
 Balance of Payment
Balance Of Payment (BOP) is a statement which records all the monetary transactions
made between residents of a country and the rest of the world during any given period.
The balance of payments (BOP) reflects all payments and obligations to foreigners vs. all
payments and obligations received from foreigners. It's a record of all financial flows in and
out of a country.
It highlights the direction of economic growth or otherwise of any country and is a ground
on which many important policy decisions are based.
A balance of payments deficit means the country imports more goods, services and capital
than it exports.
A balance of payments surplus means the country exports more than it imports
The BOP calculation goes beyond merely subtracting outflows from inflows. It is actually
composed of three subaccounts: the current account, the capital account, and the
financial account, each of which have their own types of inflows and outflows.
The balance of trade is the difference between the value of a country's imports and
exports for a given period. The balance of trade is the largest component of a country's
balance of payments. Economists use the BOT to measure the relative strength of a
country's economy..
 Balance of Payment position of Bangladesh
Bangladesh’s Balance of Payment(BoP): USD: Current Account (CA) data was reported at -936.000 USD
in Mar 2019. This records an increase from the previous number of -2.078 USD for Dec 2018.
Bangladesh’s Balance of Payment(BoP): USD: Current Account (CA) data is updated quarterly,
averaging 0.000 USD from Sep 2011 to Mar 2019, with 31 observations. The data reached an all-time
high of 1.939 USD in Dec 2014 and a record low of -3.293 USD in Jun 2018.
 Foreign Exchange Reserve

Foreign exchange reserves is money or other assets held by a central bank or

other monetary authority so that it can pay its liabilities, if needed, such as the
currency issued by the central bank, as well as the various bank reserves
deposited with the central bank by the government and other financial
institutions.

Foreign exchange is important because it helps a country to pay its import bills
towards imported goods and services by its citizens or companies.

An exchange rate regime is how a nation manages its currency in the foreign

exchange market. An exchange rate regime is closely related to that country's
monetary policy. There are three basic types of exchange regimes: floating
exchange, fixed exchange, and pegged float exchange.

43   Bangladesh 44,240 24 February  304

2021
 Foreign Exchange Reserve of Bangladesh
Foreign Exchange Reserves in Bangladesh increased to 32549.90 USD Million in
June from 31344.80 USD Million in May of 2019. Foreign Exchange Reserves in
Bangladesh averaged 19894.86 USD Million from 2008 until 2019, reaching an all
time high of 33596.30 USD Million in August of 2017 and a record low of
7470.90 USD Million in June of 2008.
 Rate of Exchange
An exchange rate is the rate at which one currency will be exchanged for another.
It is also regarded as the value of one country’s currency in relation to another
currency.

The Bangladeshi Taka is the currency of Bangladesh. Our currency rankings show
that the most popular Bangladesh Taka exchange rate is the EUR to BDT rate. The
currency code for Takas is BDT, and the currency symbol is Tk.
There are three functions:-
Transfer Function: The basic and the most visible function of foreign exchange
market is the transfer of funds (foreign currency) from one country to another for
the settlement of payment.
Credit Function: FOREX provides a short-term credit to the importers so as to
facilitate the smooth flow of goods and services from country to country.
Hedging Function: The third function of a foreign exchange market is to hedge
foreign exchange risks. Due to this reason the FOREX provides the services for
hedging the anticipated or actual claims/liabilities in exchange for the forward
contracts.
Rate of Exchange of Bangladesh
DATE VALUE CHANGE, %
2018 83.5 3.77 %
2017 80.4 2.51 %
2016 78.5 0.67 %
2015 77.9 0.39 %
2014 77.6 -0.59 %
2013 78.1 -4.59 %
2012 81.9 10.40 %
2011 74.2 6.47 %
2010 69.6 0.88 %
2009 69.0 0.64 %
2008 68.6 -0.40 %
2007 68.9
 Agriculture

Agriculture is the science and art of cultivating plants and livestock. Agriculture was the key development in
the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses
that enabled people to live in cities.
Agriculture is the process of producing food, feed, fiber and many other desired products by the cultivation
of certain plants and the raising of domesticated animals.
The practice of agriculture is also known as "farming", while scientists, inventors and others devoted to
improving farming methods and implements are also said to be engaged in agriculture.
Subsistence farming, who farms a small area with limited resource inputs, and produces only enough food to
meet the needs of his/her family.
At the other end is commercial intensive agriculture, including industrial agriculture.
Such farming involves large fields and/or numbers of animals, large resource inputs (pesticides, fertilizers,
etc.), and a high level of mechanization.
These operations generally attempt to maximize financial income from grain, produce, or livestock.
Modern agriculture extends well beyond the traditional production of food for humans and animal feeds.
Other agricultural production goods include timber, fertilizers, animal hides, leather, industrial chemicals
(starch, sugar, alcohols and resins), fibers (cotton, wool, hemp, silk and flax), fuels (methane from biomass,
ethanol, biodiesel), cut flowers, ornamental and nursery plants, tropical fish and birds for the pet trade, and
both legal and illegal drugs (biopharmaceuticals, tobacco, marijuana, opium, cocaine).

The 20th Century saw massive changes in agricultural practice, particularly in agricultural chemistry.
 Agriculture situation of Bangladesh

GDP From Agriculture in Bangladesh increased to 10739.10 BDT Million in 2019 from 10468.80 BDT
Million in 2018. GDP From Agriculture in Bangladesh averaged 9012.60 BDT Million from 2006 until
2019, reaching an all time high of 10739.10 BDT Million in 2019.
 Industry
Industry is the economic activity concerned with the processing of raw materials
and manufacture of goods in factories.
An industry is a group of companies that are related based on their primary
business activities. In modern economies, there are dozens of industry
classifications, which are typically grouped into larger categories called sectors.
The manufacturing or technically productive enterprises in a particular field,
country, region, or economy viewed collectively, or one of these individually. A
single industry is often named after its principal product. For example, the auto
industry.
Any general business activity or commercial enterprise that can be isolated from
others, such as the tourist industry or the entertainment industry.
There are three types of industries, like
1. Agriculture Industry
2. Manufacturing Industry
3. Service Industry
Industrial Situation of Bangladesh
 Service Sector
The service sector, also called tertiary sector, is the third of the three
traditional economic sectors. Activities in the service sector include retail,
banks, hotels, real estate, education, health, social work, computer services,
recreation, media, communications, electricity, gas and water supply.
Some service sector of Bangladesh
• Business services (including professional and computer)
• Communication services.
• Construction and related engineering services.
• Distribution services.
• Educational services.
• Environmental services.
• Financial services (Insurance and Banking)
• Health related and social services.
 State Owned Enterprises
A state-owned enterprise (SOE) is a business enterprise where the
government or state has significant control through full, majority, or
significant minority ownership.
The contribution of SOEs to GDP, value addition, employment generation and
revenue earning are very important
A State Owned Enterprise (SOE) is a body formed by the government through
legal means so that it can take part in activities of a commercial nature.
Essentially, SOEs are created to undertake commercial activities.
A state-owned enterprise (SOE) is a legal entity that is created by a
government in order to partake in commercial activities on the government's
behalf. It can be either wholly or partially owned by a government and is
typically earmarked to participate in specific commercial activities.
 Power and Energy Transport
Power and Energy is the capacity to do work. Life is unthinkable without energy.

Not only all the comforts of modern life but also the necessities are not possible without
power and energy. Sun is the most source of most natural energy in this world. Types of
energy sources:

Renewable- Sun , Wind, Water

Non renewable-Fossil Fuel, Nuclear fuel, electricity, wood

Transportation refers to systems which are designed to move people and goods. It is a
central part of how people live their lives, build economies, and interact with the
environment. Transportation provides us with access to what people value and need to
live their lives: work, education, food, recreation and other essentials.

Transportation is the backbone of a global network.

 Communication
The imparting or exchanging of information by speaking, writing, or using some other medium.
Means of sending or receiving information, such as telephone lines or computers.
Communication is the act of conveying meanings from one entity or group to another through
the use of mutually understood signs, symbols, and semiotic rules.
There are several different ways we share information with one another. For example, you
might use verbal communication when sharing a presentation with a group. You might use
written communication when applying for a job or sending an email.
There are four main categories or communication styles including verbal, nonverbal, written
and visual.
Bangladesh's communication systems are somewhat underdeveloped, they are being
improved. Internet access in Bangladesh is available in the larger cities. While there are a
variety of methods of communication in Bangladesh's cities, visitors may find it difficult to find
similar forms of communication in rural areas. Four types
Telephones
Internet Access
Mass Media
Post/Mail
 Human Resources Development
Human Resource Development (HRD) is the framework for helping employees develop
their personal and organizational skills, knowledge, and abilities.

Human Resource Development includes such opportunities as employee training,

employee career development, performance management and development, coaching,
mentoring, succession planning, key employee identification, tuition assistance, and
organization development.

The role of human resource development is to support organizational goals. ...

When employees are improving their ability and performance, an organization
achieves higher levels of success.

Difference between HRD and HRM. Human resources development refers to an

organization's focus on improving the knowledge, ability, skills, and other talents
of their employees. The human resource management is mainly maintenance
oriented whereas human resource development is development oriented.
 Poverty Alleviation

Poverty reduction, or poverty alleviation, is a set of measures, both economic and

humanitarian, that are intended to permanently lift people out of poverty.
The top causes of global poverty
Inadequate access to clean water and nutritious food.
Little or no access to livelihoods or jobs.
Conflict.
Inequality.
Poor education.
Climate change.
Lack of infrastructure.
Limited capacity of the government
Here are some steps Congress can take to cut poverty.
•Create jobs.
•Raise the minimum wage.
•Increase the Earned Income Tax Credit for childless workers.
•Support pay equity.
•Provide paid leave and paid sick days.
•Establish work schedules that work.
 Private sector Development

Private Sector Development (PSD) is a term in the international development industry to

refer to a range of strategies for promoting economic growth and reducing poverty in
developing countries by building private enterprises. This could be through working with
firms directly, with membership organizations to represent them, or through a range of
areas of policy and regulation to promote functioning, competitive markets.

The private sector is the part of a country's economic system that is run by individuals
and companies, rather than the government. Most private sector organizations are run
with the intention of making profit. The segment of the economy under control of the
government is known as the public sector.

The objective of the Private Sector Development Support Project for Bangladesh is to
facilitate investment in growth centers in the emerging manufacturing and services
sectors of the economy with the aim of generating employment.
 Environment and Development
Basic Principles, Human Activities, and Environmental Implications focuses on the adverse
impact that human activities, developments, and economic growth have on both natural and
inhabited environments.
As the economic growth and development of the country largely depends on natural
resources, it is important to ensure sustainable environmental development. According to
‘Vision 2021’, the Government of Bangladesh has been implementing various programs
incorporating the measures of environmental pollution control and impact of global warming.
Meanwhile, Bangladesh has achieved the target of ensuring safe drinking water and sanitation
for all people as envisaged in the Millennium Development Goal (MDG) set by United Nations.
The Government also integrated the Sustainable Development Goals (SDGs) in the Seventh
Five Year Plan (2016-2020) and has set 11 targets in it. Bangladesh has introduced the
mapping of ministries, data analysis and national monitoring and evaluation framework for
SDGs implementation. Bangladesh Climate Change Strategy and Action Plan, 2009 (BCCSAP
2009) is being implemented to address the impact of climate change where both adaptation
and mitigation activities have been considered. Bangladesh Climate Change Trust Fund
(BCCTF) has been formed from internal resources in implementing BCCSAP 2009 and allocated
a total amount of Tk.3,100 core from the FY2009-10 to FY2016-17. Moreover the Government
has enacted Climate Change Trust Fund Act 2010 and formulated Climate Change Trust Fund
Policy for better management of BCCTF.
 Environment and Development
The Sustainable Development Goals (SDG) eventually came up with a list:
• The end of poverty and hunger.
• Better standards of education and healthcare, particularly as it pertains to water quality and better
sanitation.
• To achieve gender equality.
• Sustainable economic growth while promoting jobs and stronger economies.
• Sustainability to include health of the land, air, and sea.
 Wage Rate Index
The wage rate index is intended to measure the movement of wages of low paid skilled and
unskilled labour over time in main sectors of the economy such as agriculture, industry and service.
 Labor Force and Employment

The labour force is the sum of persons in employment plus persons in unemployment. Together these two
groups of the population represent the current supply of labour for the production of goods and services
taking place in a country through market transactions in exchange for remuneration. 
Based on the latest international statistical standards, the population of working age in a country may be
classified according to their labour force status in a short reference period into three mutually exclusive and
exhaustive groups. Persons in employment, persons in unemployment and persons outside the labour force.
so
Employees
The term "employee" refers, in a general sense, to anyone who works for someone else in exchange for
monetary compensation. In the U.S., the term "employee" sometimes has more specific connotations,
referring to a member of a staff. This distinguishes employees from independent contractors, who work for
compensation but don't belong to any particular staff.
Labor Force
All employees are part of the labor force, but the labor force also includes people on unemployment who
are seeking work, as well as the employers who provide employees with compensation. Although a job
seeker would be considered part of the labor force, she wouldn't qualify as an employee.
 Steps Taken for Development of Labor and Employment
The ILO works with its partners in Bangladesh to promote compliance with international
labour standards by helping address shortcomings in legislation and by providing policy advice.
Employment provides the key link between economic growth and poverty making it the major
tool for poverty reduction in Bangladesh. The country’s poverty reduction strategy would be
sustainable if it is consistent with a well-articulated employment strategy that creates
productive and decent employment opportunities so that workers of every level of skill,
education, and training can get remunerative employment. For this, along with
economic growth driven by sectors that are labor-intensive in nature and have greater
potential of job creation, the policy framework needs to promote an employment-friendly
environment, encourage labor-intensive restructuring in both formal and informal sectors,
facilitate the skill development of the labor force, and bring about appropriate changes in
labor market policies. In addition, the policies must seek to fulfill the aspirations of the
people in their working lives including opportunities, incomes, rights, voices, and
recognition.
1) Maintain a good environment in the garments sectors
2) Development of skill knowledge and training
3) Stop the child labour
4) Woman training and development
5) Take some development steps for labour force