Aziz sees signs of economic recovery

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Finance Adviser Dr Mirza Azizul Islam expects that the economic growth would be reaching around 6.0 per cent in 2007-08, belying the projections of international agencies, as he sees signs of recovery in the major indicators, reports UNB.
He was also hopeful that the foreign exchange reserve would remain at around US$ 6 billion by the yearend despite increased imports, mainly the food items.
He was talking to the news agency at his Planning Ministry office Wednesday on the country's economic challenges and prospects. "As per the latest data, we're reaching around 6.0 per cent (GDP growth)," he said, showing recovery in export growth, recent increase in credit flow to the private sector, increase in raw material imports, revenue growth and favourable foreign aid.
The World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) projected that Bangladesh's GDP growth would be at 5.5 per cent while the London-based Economists Intelligence Unit (EIU) projected it to be 5.7 per cent.
The Bangladesh Bank has also been expecting that the country's GDP growth would be around 6.0 per cent.
Asked about the impact of slow export growth on the GDP as economic growth in the USA and the European Union, Bangladesh's major export destinations, has been projected to be much lower, he said there could be a positive impact on Bangladesh's export growth as the consumers in the developed countries would prefer low-cost items in a slowed down economic condition.
On the other hand, he added, Bangladesh exports low-cost items to those countries that might result in positive impact on the country's export growth.
Meantime, Dr Aziz said, the country's exports have already recovered from a negative growth by the end of December, 2007 and turned positive.
He said the export growth has already reached 7-8 per cent by the end of February.
The February figures from the Export Promotion Bureau (EPB) have not yet been released.
The Finance Adviser was expecting that the export growth would reach 13-14 per cent by the yearend (June 30, 2008).
The government had set an export target of US$ 14.5 billion for the current fiscal year with a 19 per cent growth over the previous fiscal year's export performance of US$ 12.18 billion.
During the first half of the current fiscal year, the exports grew by over 4.0 per cent to US$ 6.5 billion, which was 8.0 per cent lower than the period's target of US$ 7.1 billion.
He thought the lone negative side of the economy still remained in slow capital machinery imports, and said new investment is lower because entrepreneurs prefer utilising installed capacity at some points of time. 'I'm not worried about the inflow of foreign aid,' he said, giving a positive note that the foreign aid disbursement would be favourable during the fiscal year.
About the possibility of decline in the foreign exchange reserve due to increased imports, the Finance Adviser said the reserve declined from US$ 6.0 billion-mark to just over US$ 5.0 billion due to the bimonthly payment of US$ 730 million plus to the Asian Clearing Union (ACU).
The forex reserve is, however, unlikely to decline too much and it would remain at around US$ 6.0 billion by the yearend if the exports recover to the extent now expected and the remittance inflow maintains the current pace.
A Bangladesh Bank senior executive said the ACU payment has zero impact on the reserve as they settle the import payments after two months from the foreign currencies paid by importers against their imports in advance.
'There is hardly any reason at present for the reserve position to fall sharply,' he said, adding that they were expecting the reserve would remain at more than US$ 6.0 billion at the end of June this year.
He said they are also expecting that the remittance would stand at around US$ 7.0 billion at the end of current fiscal compared to over US$ 5.0 billion in the last fiscal year.
Another UNB report adds: Finance Adviser Dr Mirza Azizul Islam visits the port city of Chittagong today (Saturday) to kick off his pre-budget discussions with stakeholders.
It would be the first of his initiative to hold similar meetings in all the divisional headquarters to get inputs for preparing the budget. Last year, he held similar discussions in two divisional headquarters - Chittagong and Rajshahi.
People from a cross-section of the society, including government officials, businessmen, academics, journalists, NGOs and other stakeholders would join the discussions.
"It'll be a listening post to know the expectations of a cross-section of the society," Finance Adviser Dr Mirza Azizul Islam told the news agency about his plan. He said he would try to pick up the broad priorities of the budget.
"Though it's not taking place at the grassroots level, we're trying to reach the divisions," he added.
The National Board of Revenue (NBR) has already started holding pre-budget discussions with the private sector.