Rejuvenating sluggish economy prime priority
Says Dr Salehuddin after taking finance charge
FE REPORT | Saturday, 10 August 2024
Rejuvenating the slowed-down economy and fixing problems facing the stock market, and banking and financial sectors are priorities for now, said Finance and Planning Adviser Dr Salehuddin Ahmed after taking charge on Friday.
He also said restoring law and order is a prime priority for the interim government, which took over amid a disorderly situation following the exit of the immediate-past government in the face of a student-mass upheaval.
Mr Ahmed, a former governor of the central bank, notes that business activity has slowed considerably and various challenges have emerged.
"My priorities include reinstating law-and-order situation… rejuvenating the economy, and offsetting the impacts on people's life and livelihood," he told newsmen after laying wreath at the Central Shaheed Minar in the capital.
The new government began its journey by paying respects to liberation and language martyrs.
Replying to a query about chaos at the central bank, the adviser said he was aware of the developments there. "I will look after it, as soon as possible."
There are various problems in the banking sector, the financial sector and the stock market. "I will fix the problems," the finance and planning adviser added.
Dr Ahmed has taken office at a time when Bangladesh's economy has long been facing serious troubles, especially macroeconomic instability including stubbornly higher rate of inflation.
The central bank pursues a tight monetary policy to tame the inexorable inflation but it is still at around 10 per cent on a point -to-point basis, hitting hard limited-income group of people.
Bangladesh has in recent years seen a sharp decline in foreign- exchange reserves. The government is now in a $4.7-billion-loan agreement with the International Monetary Fund (IMF), reached during the rule of the immediate-past regime.
The economy has slowed sharply since the Russia-Ukraine war pushed up prices of fuels and food imports. The depreciation of local-currency taka is also raising import costs.
The country's GDP growth was 6.1 per cent in the Jan-March quarter, the third quarter of the past 2024 fiscal year, on a slope from higher rates in earlier years.
The IMF in its latest report said it expected economic growth to average at 5.4 per cent in the fiscal year 2024, little higher than 4.8per cent recorded in the first half.
In the meantime, Bangladesh's latest July PMI (Purchasing Managers Index) recorded a sharp contraction to 36.9 or 27 points down from June, as all key sectors of the economy reverted to contraction readings.
This is the first contraction of the economy since it has been measuring the PMI since January last. It is widely used by investors, businesses and policymakers for making key decisions.
A PMI or Purchasing Managers' Index reading above 50 indicates that the sector or economy is generally 'expanding', at 50 indicates 'no change' compared to last month, while a reading below 50 indicates a 'contraction'.