Economic situation

The current condition of the country's stock market is directly related to the prevailing macroeconomic situation of the country. A large number of investors in the country's two stock exchanges have already been badly affected by market scam. As government borrowing from the country's banking system has been increasing day by day, the banks have been facing a liquidity crisis. Some banks are reportedly offering 13 to 14 per cent rate of interest on fixed deposit and 8.5 per cent on savings account deposits and short term deposits. The country's import payment is becoming increasingly much higher than the export earnings, and the gap continues to widen. This has resulted in a balance of payment deficit; the inward remittance has not been growing as per expectation; the foreign exchange reserve is being depleted; and, credit flow by the commercial banks to the private sector has also slowed down. All these developments indicate macroeconomic mismanagement. On the other hand, donor agencies are prescribing for upward adjustment of fuel and electricity prices to reduce government subsidies. The recent market stabilisation package announced by the Securities and Exchange Commission (SEC) is unlikely to offer any viable solution as a major portion of our investors expects quick returns on their invested funds. Ahmed Showkat Masud Mirpur, Dhaka Email: ahmed.masud69@yahoo.com