Editorial
Stepping back from PSI
Government has shown respect to public sentiment
The decision by the Bangladesh government and the visiting team of the International Monetary Fund not to negotiate a deal on the IMF's Policy Support Instrument is a step that will be welcomed by broad sections of people in Bangladesh. One reason for that is that both sides have taken clear note of public opinion about the PSI and have, therefore, acted in accordance with public sentiment. In the last several days, some leading economists as well as media experts have pointed out the probable negative fall-out of any Dhaka-IMF deal that might have been reached on the issue. Overall, therefore, this move by the government and the IMF to step back from the PSI issue has been a good instance of rethink on their part and will certainly go down well with the nation.
We note here, of course, that earlier the adviser for finance had assured the country that no deal that ran contrary to national interests would be agreed to by the government, indeed that any deal, if reached, would be made public. It now appears that the government has indeed been circumspect in its move and has acted in its own wisdom. We will expect that in future, governments in Bangladesh will take cognisance of the hopes and aspirations of the nation and will therefore do nothing that may be seen as compromising autonomy in national policy making. In this connection, we might add that in recent years the perception has grown that there is a preponderance of the wishes of the Bretton Woods institutions in the shaping of Bangladesh's economic policies and programmes. One can hardly deny the consequences that such actions as an abrupt closure of jute mills and a privatisation of banks have caused in the social sector. In simple terms, the social costs resulting from policies adopted as a result of donor advice have been rather high considering our socio-economic realities.
It is encouraging to know from the governor of the Bangladesh Bank that henceforth no tightening of monetary policy will be pursued. On the contrary, a relaxation of policy will ensure a flow of credit to the private sector. The effects on the economy should therefore be positive. It is thus a clear indication of the nature of policy formulation the government intends to follow.
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