Editorial
Tiding over the downturn
A clear-cut action plan must emerge from the policy announcement
WE draw a sense of relief from the fact that the government has finally made a coherent and substantive policy statement on its plans to shore up the economy already facing the tribulations of global financial meltdown, with 2010 feared to be critical.
It's stating the obvious that like the developed countries liquidity-strapped Bangladesh cannot afford to give direct cash incentives to various sectors, it has to content with providing subsidies. The burden of financial bailouts resorted to in advanced countries fall on the ordinary taxpayers, a prospect far from desirable in our context. Therefore, the subsidisation option seems to be the natural course to take which finance minister AMA Muhith has done thereby signaling the government's clear stance on the matter.
The issue is basically reducing the spread of interest rates, between the deposit and the lending rates, so as to make money available to trade and industry at cheaper rates thereby helping to boost overall investment. The banks are required now to positively respond to government's attempts at bridging the gap between the deposit and lending rates which is the widest in the region, and little wonder with their inhibiting effect on the economy.
The decision to create an export stabilisation fund is potentially a good one having regard to the support that the affected export sectors stand in need of. There is no gainsaying that we have to go for market and product diversifications.
The new budget featuring the agenda of employing public-private partnership in generating funds for infrastructure-development and employment creation is a novelty that will be as good as its implementation. This entails a certain amount of institutional preparedness. It is heartening to know though, the government is seriously considering assisting the returnee workers from the wage earners' fund.
Although the finance minister candidly favours seeking more aid from donors, the emphasis seems to be on pooling of internal resources by whatever means possible. To the best of our knowledge, the multilateral financial institutions have uttered promising words to come in aid of a recession-hit Bangladesh economy. However, the less we contract external indebtedness, the better for us.
One final point, in the context of declining prices, relates to the task of striking a balance between helping the farmers to get fair prices for their produce and allowing the consumers to buy commodities at tolerable prices. This exercise would be pivotal to boosting agricultural production.
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