‘Don’t let forex reserves go below $15b until elections’
Staff Reporter :
Bangladesh should not allow its foreign currency reserve fall below the $15 billion-mark at any cost until the next parliamentary election, which is likely to be held in early January next year, economist Ahsan H Mansur said yesterday.
Urgent reforms are required, according to Ahsan H Mansur, executive director of the Policy Research Institute (PRI), to prevent the country’s forex reserves from dropping below the $15 billion threshold.
He made these comments while addressing a seminar jointly organized by the World Bank and South Asian Network on Economic Modeling (Sanem) titled “Fiscal Challenges in South Asia” at Brac Centre Inn in Dhaka.
“Right now, we have to take a short-term plan to maintain the level of the forex reserve.
Bangladesh must explore all possible options, including getting the second tranche of loan from the International Monetary Fund (IMF), support from the World Bank and other bilateral sources, to save its reserves,” he added.
Long-term reforms in Bangladesh’s economy, despite being long overdue, have taken a backseat mainly due to depleting foreign exchange (forex) reserves and inflation.
The country has an election ahead and this is not a normal one as many uncertainties might erupt centering the polls in the days to come, Mansur said.
Regarding fiscal policy, Prof Selim Raihan of the Department of Economics, University of Dhaka, and executive director at Sanem, said: “The next 2-3 months are very important for the country’s economy.
If no effective short-term plan is adopted within this period, considering the national election ahead, the situation will not be promising at all, it could even be worse.”
Franziska Lieselotte Ohnsorge, chief economist for South Asia at the World Bank, presented a keynote paper while Sanem Executive Director Prof Selim Raihan moderated the event.
According to the latest data from the Bangladesh Bank, the country’s foreign reserve stood at $21.05 billion.
Earlier, Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, said the net reserve would be less than $18 billion if the central bank’s liabilities are considered.
Meanwhile, in another program on Sunday former Bangladesh Bank governor Dr Mohammad Farashuddin said Bangladesh is concerned about forex reserves but not alarmed.
“Our economy is still strong. Economically, we have overtaken Pakistan, Sri Lanka and are now competing with India, the former governor added.
He was made the remarks while speaking as the chief guest at a debate competition on the strategy of increasing domestic income for economic protection organized by Debate for democracy in Dhaka.
Farashuddin further said, “Why do defaulters get away not once, not twice, but again and again? Why do they take loans and don’t pay them off? Farmers have to go to jail if they cannot repay an agricultural loan of Tk1,000 but the defaulters of Tk10,000 or Tk20,000 crore can travel abroad.”
