The country does not need to provide bailout package to any entire sector for offsetting impacts of global recession unlike the packages offered by the Western governments, the central bank governor said on Wednesday.
Salehuddin Ahmed stressed on promoting inward looking development to significantly substitute export market of some products, also airing confidence of retaining the flow of remittances in the coming months through regulatory and incentive measures to keep a healthy foreign exchange reserve.
‘Bangladesh doest not need economy-wise [bailout or stimulus] package,’ he stated while making deliberation at a seminar on ‘Global Financial Crisis and Impact of Recession on Bangladesh’ at the Independent University. Bangladesh.
The Bangladesh Bank governor, when asked later, elaborated that no blanket package should be given to a sector since ‘nothing like collapse of financial institutions in the West happened here’. He, however, felt that those who would be really affected by the fallouts of the global crisis should be given necessary supports.
Salehuddin dispelled the complaints of complacence in Bangladesh, which remained largely unaffected from the global crisis despite risks involved in the next phase of recession effects, and added that the Bangladesh Bank, in close cooperation with the finance ministry, was monitoring the situation to take measures. ‘We are watchful but we don’t want to give any bad signal,’ he pointed out,
He further showed silver-lining in the flow of remittances in the nine of the current fiscal year at $7.29 billion compared to $7.9 billion in the entire 2007-08 fiscal. ‘If number of Bangladesh people abroad comes down, I will still be able to tap the remittances by increasing official flow because 30 per cent to 40 per cent remittances still come through unofficial channel,’ said the governor.
He informed the gathering that Bangladesh, as only country in South Asia, had current account surplus and it also had a positive balance of payments with $$462 million as the latest surplus.
The central bank is trying to ensure adequate liquidity with the banks for distribution of both industrial and agricultural credits. ‘We want to ensure that there is adequate credit flow to the productive sector; otherwise, business will come to a halt,’ Salehuddin maintained. ‘We want that real sector does not suffer from credit crunch.’
He said Bangladesh Bank was also trying to increase re-financing fund of Tk 550 crore so that entrepreneurs of small and medium enterprises could be provided with capital for initiating venturing or running the current one properly. He also mentioned about efforts to disburse loans from Tk 3000-crore housing fund and export development fund now worth $150 million.
Dwelling on the fall in demand in the West affecting exports from countries such as Bangladesh, Salehuddin pointed out that the country must try to increase domestic demand baking on investment opportunities and creating massive employment.
In this context, he emphasised the importance of creating and grasping domestic market of more than 140 million people, but admitted that many investors were not taking their decisions, given the circumstances at home and abroad.
The governor discarded suggestions to bring down significantly the interest rate on various loans. ‘Unless there is increased demand, what do you do with the money at zero per cent interest?’ he questioned at the seminar by the university’s School of Liberal Arts and Social Sciences.
Asked about devaluation of Taka against US dollars, he said the central bank could not do so under the floating exchange rate regime. ‘If we temper artificially it will give bad signal to the market,’ he said terming the current value of Taka close to effective exchange rate. He also pointed out that even if dollar was appreciated by Tk 6, it would have given an export competitiveness of 0.7 per cent at the costs of low to the import sector.
The vice chancellor of the university Bazlul Mobin Chowdhury appreciated the governor’s statements and thoughts on relevant issues. Pro-vice chancellor Omar Rahman moderate the discussion chaired by the director of the school Nazrul Islam.
Source: The Daily New Age, 09 April 2009