Economic situation remains on track, says Muhith

FE Report Finance Minister AMA Muhith said Thursday that the government might opt for floating sovereign bonds to help ease pressure on the country's foreign exchange (forex) reserve. "We have to go for introducing the sovereign bond as many countries in the world, including Sri Lanka, have got positive results from such bond," Mr. Muhith told reporters after a meeting with a Swedish delegation which was led by its State Secretary Hanna Hellquist. "We are examining the pros and cons of the proposed bond arrangement as it will be first of its kind for Bangladesh," he added. The meeting with the seven-member Swedish delegation was held at the conference room of the Ministry of Finance (MoF). UNB adds: Finance Minister Mr. M A Muhith on Thursday dispelled fears about any adverse fallouts from government's heavy borrowings from the country's banking sector. "In the first three months of the current fiscal year (FY), it (aggregate bank borrowing by the government) was a somewhat higher than before. When our revenue income will increase, it'll ultimately get balanced," he told reporters replying to a question at his secretariat office. Under the budget for FY 2011-12, the Finance Minister said, the estimated budget deficit was shown at around Tk 450 billion (45,000 crore), out of which Tk 270 billion was projected to come from domestic resources and the rest, from foreign sources. "We've no plan to exceed our target about budget deficit," he said adding that efforts will continue to help contain it within the limit of five per cent of gross domestic product (GDP). The Finance Minister's observation about the state of the economy was largely different from what the 'critics' have been noting as 'bad' or 'quite disconcerting'. According to the central bank statistics, the government's net aggregate borrowing from the banking system shot up to Tk 111.99 billion for the period between July 01 and October 23 in the current fiscal as against Tk 3.07 billion in the corresponding period of the last one. Replying to a question, Muhith said a large amount of foreign aid is in the pipeline as the government has not been able to utilise the same. "If those can effectively be utilised in time, the domestic bank borrowing will automatically come down." Asked about the reasons for depreciation of Taka against US dollar, Mr. Muhith said the external value of Taka has fallen marginally in recent times. The value of US dollar usually appreciates against Taka during the period of Hajj, he added. He stated that a constantly steady exchange rate of Taka 69 against one US dollar in the floating market was wrong. The authorities concerned had frequent made interventions in the market for which gradual depreciation of BDT was avoided or could be averted. "It'll take some time for things to get stabilized", he added. According to the central bank website, the buying rate of dollar was Tk 76.24 and the selling rate Tk 76.29 on Thursday. Commenting on the situation in the country's private sector, Muhith said things are going very well there, in terms of more vibrant and accelerated pace of activities, but some people in the private sector have the habit of lodging complaints all the time. Terming RMG as the country's most 'acclaimed' sector, he said the business leaders of readymade garments (RMG) industries often say that they are in troubles when placing often various demands before the government. "But our perception about them is totally different as we feel that the RMG is the most 'pampered' sector. The government also looks into their woes and distresses always", he observed. About the growth rate of the GDP, he said it should be 10 per cent for Bangladesh, but the country has not been able to achieve it for various reasons. "There are inadequacies.investment is much less .it should have been much higher. Besides, we've not been able to attract foreign direct investment or FDI." Alleging that the BNP-led four-party alliance government had shattered the country's statistical system, the Finance Minister said, "We couldn't upgrade the statistical system up to the international standards because the methods are changing frequently." The total number of population in the final count of the country's fifth Housing and Population Census would be around 15.5 crore, he stated. "I hope this figure will be credible and acceptable to all", he added.