Trim the Shopping List
Devaluation of Taka by 85 paisa to a dollar, for the twelfth time since the AL took office one and a half years ago, has the look of a woodpecker's chipping away consistency. But this time around, evidently, it is no small bite taken of our currency value and that is where lay the compulsion felt by the government to have gone for it. Our export competitiveness was being eroded through a drastic devaluation of currencies among our trade competitors and partners who thereby gained an upperhand over us in sales abroad. A booster dose to our exports and foreign currency remittances was poignantly necessitated by a dismal tumble of our foreign currency reserve. From its peak at 3.4 billion dollars in April, 1995 the forex position has dropped off to 1.66 billion dollars almost placing us in the category of balance of payment deficit countries making news with the IMF for not having even a three-month import cover.
Foreign remittances from Bangladeshis earning abroad have lately shown a downward trend for a host of reasons, not least of which being the SEA financial turmoil. These needed to be spurred on by the prospect of foreign currency fetching more Taka at home.
As for exports, must we remind the traders that there is more to the competitive edge over other exporting countries than an enhancement in the par value of Taka: or quality of products, timely shipment, squaring up with all the contractual obligations. The devaluation puts pressure on the exporters, government agencies, financial institutions and ports to perform better than before.
The negative implications of devaluation mustn't be overlooked insofar as the costliness of imports, an attendant setback to industries and an increase in cost of living go. The interrelationship is obvious. Higher import bill on industrial raw materials and machinery can markedly inhibit productivity in the manufacturing sector. Sizable food imports may not be avoidable after less-than-a-bumper Aman crop, so that both forex reserve and cost of living index might be under pressure.
A composite answer to these problems lies in a judicious curtailment of the shopping list.
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