BB governor suggests close watch on securities market, insurers

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FE Report
Experts and economists called Saturday for formation of a high-powered taskforce to assess the possible impact of the global financial meltdown on Bangladesh and devise both short and medium-term policy measurers to protect the domestic economy.
Speaking at a dialogue, most of the discussants while seeing no major impact of the global crisis on Bangladesh gave their opinion in favour of setting up such a body as precautionary steps.
Largely participated by policy makers, economists, business leaders, representatives of foreign missions, politicians and members of the civil society, the dialogue on "The Global Financial Crisis and What it means for Bangladesh" was organised by the Centre for Policy Dialogue (CPD) at the city's CIRDAP auditorium.
Bangladesh Bank Governor Salehuddin Ahmed spoke on the occasion while Ambassador and Permanent Representative of Bangladesh to the WTO and UN Offices in Geneva Debapriya Bhattacharya presented the keynote paper on the dialogue with prominent economist Rehman Sobhan in the chair.
"There is a need to set up a competent task force to assess the effects and impact and design an adjustment package with both short and medium term policy institutional measurers," Debapriya said while presenting his keynote paper.
It is too early to conclusively assess the impact on Bangladesh as the global financial crisis continues to rage across the world, he said, adding, "We do not have the real time data to assess the situation."
Also laying emphasis on the need for macro-economic policy adjustment, he said it can be done by reviewing the public expenditure portfolio to accelerate implementation of infrastructure projects and strengthening credit flow.
He put a number of suggestions including taking the advantages of sobering trend in inflation, persuasion of expansionary monetary policy and lowering of interest rates in line with inflationary trend.
The economist-turned envoy also recommended an active management of exchange rate, strict monitoring on the activities of credit rating agencies, intensification of export market exploration in emerging economies and consolidation of the country's labour markets.
Agreeing with Dr. Debapriya about setting up of a taskforce, the BB governor, however, called for united efforts from all the agencies concerned to help protect the country from current global financial crisis.
"Not only the central bank, all the agencies should come forward to help the country prevent the effects of global financial crisis," the BB governor said.
He also said the central bank is closely monitoring the emerging situation and has already taken some measures in this connection.
"We are in favour of injecting money into the market, but at the same time it must be ensured that the money goes to small investors and agriculture sector instead of big borrowers," Dr. Salehuddin said.
He said: "We must not allow any short-term portfolio investments."
The BB chief also suggested that there was an urgent need to be careful about the activities of country's securities market and insurance companies against the backdrop of the global financial turmoil.
Giving his opinion in favour of setting up of a taskforce and adoption of expansionary monetary policy, Former finance minister Abul Mal Abdul Muhit, however, observed that the highest priority should be given to the country's agriculture sector and rural development.
The president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazlul Haq, said their exports are on a declining trend following the global financial crisis.
Considering the situation, he urged the government should refrain from raising the prices of fuel oils and gas at this moment.
Also echoing the sentiment expressed by the BKMEA president, the former BFCCI president Mir Nasir Hossain observed that the authorities should not go for devaluation of the local currency right now.