Reaching the IMF-set targets for Bangladesh on net foreign-exchange reserves is not possible, Finance Minister AHM Mustafa Kamal observed on Tuesday, after the forex coffer took another knock.
"Compared to other countries, Bangladesh's forex reserves are in a good position both in terms of net and gross amounts," he said while talking to newsmen at his secretariat office on the day after his re-election to parliament in Sunday's polls.
On Monday, the gross reserves fell to $25.70 billion by official count as the central bank cleared import payments amounting to $1.27 billion through the Asian Clearing Union (ACU) mechanism.
And the gross forex reserve as calculated in line with the International Monetary Fund (IMF)'s BPM6 arithmetic fell far deeper to $20.40 billion from $21.74 billion as on Thursday last.
Asked, why Bangladesh then failed to meet the forex-reserve target as set by the IMF in its $4.7-billion loan package, the finance minister replied: "Their target cannot be met."
However, the minister wouldn't elaborate on the reasons for the failure.
For June last year, the IMF had set the requirement for maintaining a net international reserves (NIR) position for Bangladesh at $24.46 billion but the country could maintain only $19.56 billion then.
Subsequently, requested by the government, the IMF lowered the NIR target for December last at $17.78 billion-and the country again couldn't come up to the mark, evidently because of dollar dearth for economic factors at home and abroad.
The finance minister thinks inflow of remittance, a major component of forex reserves, can be doubled which can help maintain gross reserves not lower than $30 billion.
Mr Kamal says all the components of the economy that can take it forward have not been exploited on a full scale so far in Bangladesh. "Until and unless you exploit your resources, you will not be successful," adds, without elaborating on drawbacks.
He notes that Bangladesh's income for 12 days from remittance is equal to total liability (from the IMF).
The main challenge for the new government will be the economy, the finance minister said, citing the Prime Minister's view. "What the PM said is correct. Our thoughts are also the same."
He posed here a rhetorical question: "If the economy does not remain strong, becomes weak, how the government will run and country will make progress?"
"But, we are in good position," Mr Kamal claims and requests the reporters to admit it.
To another query he said had the 6.0-percent-9.0-percent interest rates on bank deposits and credits not been introduced, the country's economy could have collapsed meantime.
"Were the interest rates between 22 per cent and 24 per cent, the economy could have derailed," said the finance minister in a reckoning at the fag-end of his outgoing tenure.
Asked about the possible consequences as the interest rates in banks are rising again, the minster replied: "If the economy can accommodate it, why not?"
By way of introducing the lower bank deposit and interest rates, the small, medium and large industries were protected.
Replying to another query, Mr Kamal said Bangladesh did not make any offence which can result in imposition of sanctions by the western nations, in particular, the United States.
The minister came down heavily on a remark of the Centre for Policy Dialogue regarding siphoning off Tk 920 billion from banking sector.
"CPD had been pushing for devaluation of local currency since we came to power past time," he said in a dig at the policy think-tank.
He shot a volley of questions: "Are we now starving? Can't we buy goods in markets? Can't sellers sell their goods? Which goods remain unsold?"
To a query on high inflation, which economists still point out as a tough challenge because of high consumer prices, Mr Kamal said inflation would prevail. "You need inflation to run economy."
He said the rate of inflation remained at around 6.0 per cent for eight to ten years. "No better rates of inflation can be offered."
© 2024 - All Rights with The Financial Express
