Let's start today's article with a good news. The news is related to the foreign exchange reserves. Our reserves broke all records and are now over বিল 40 billion. Think! We had no reserves in the post-independence period. There was a dollar crisis. I had to go to the central bank for 10-20 dollars. I had to lobby properly. And now? Now there are endless dollars available for going abroad, studying abroad. Even Bangladeshi businessmen get dollars for investment abroad (capital account). What a big leap. Do we need লার 40 billion in foreign exchange reserves? There are various opinions about this. Some people talk about breaking the reserves and building infrastructure with that money. Others are cautious. Thus, for the import of a country, one has to have the equivalent of three months of dollars. As such, we have to keep বিল 12 billion (Daily Ittefaq 9.10.20). Our reserves are endless compared to this. Reserve is a sign of a country's financial strength. Foreigners do not accept loans from Bangladeshi importers if the reserves are less than required. It takes 'confirmation' of a foreign bank to accept. Besides, if the amount of foreign exchange reserves is less than required, the value of domestic currency (money in our case) cannot be maintained. Currency means devaluation occurs. In such a situation apparently we have a lot of currency reserves. So I will break it and use it for other purposes? No, there are many obstacles in this case. The first hurdle is related to our 'currency'. The currency that is in circulation is in the name of Bangladesh Bank. In the name of the Secretary of the Ministry of Finance of the government, the currency of five taka and three mina is also introduced in the market through Bangladesh Bank. Needless to say, there are currency accounts in circulation in the market. These are the liabilities of the central bank. The central bank is obliged to return the same amount to the bearer of these currencies. To this end, every note contains the promise of the Governor of the Central Bank. Now, under the 'double entry' rule of accounting, the central bank has to keep the same amount of assets against this liability. Earlier it was kept in gold. Now that is no longer possible. Some are kept in gold and most in foreign currency and government securities. There is little in the way of silver, money, coins and other loans and advances.
It was seen in June 2019 that our Bangladesh Bank's 'dollar assets' were 1 lakh 61 thousand crore rupees. This leaves us with a fair amount of surplus dollars. But Bangladesh Bank has to keep a lot of dollars in hand for daily work. More than ৪ 4 billion a month is needed for imports. Capital of foreign companies, repatriation of dividends, repatriation of earnings of foreign workers, interest and actual repayment of government foreign loans are required for regular transactions. For all these reasons, spending dollars has to be quite calculated. Currency reserves increase, decrease. The main source of our dollar reserves is garments exports and remittances. These two have ups and downs. Especially in this corona situation. Therefore, the central bank is especially careful when spending dollars. However, the leap that has been seen for the last two-four months is very temporary. A significant reason for this leap is the increase in the amount of remittances. Not export growth. Again the contraction in imports. Since the industrial work has not been started. So imports of raw materials, intermediate goods and capital equipment are now somewhat lower. Besides, the cost of oil import is also decreasing. Oil prices are low and demand is low. Rice imports are very low. In addition, the pace of imports of consumer goods has slowed down due to lower consumption of the common man and the middle class. In this context, the small amount of dollar reserves that seem to be more in hand can be used to manage costs. I have to think.
What I mean is that we need to get our economy back to normal. In 20-21 fiscal year, our GDP growth target is 7.2 percent. Apparently it seems a little too much. However, Finance Minister AHM Mustafa Kamal refused to accept it. He wants to rely on the people of Bangladesh. On the other hand, what the World Bank and the ADB are saying is quite confusing. ADB says that in 20-21 fiscal year, our GDP growth will be 7.8 percent. In contrast, the World Bank says the growth rate will be only 1.6 percent. But the 2019-20 financial year has been very bad. No work was done for four months of that year. Despite this, the growth rate of Bangladesh has been 5.24 percent. In this context, the question is that the fiscal year 2020-21 is worse than the fiscal year? I don't think so at all. It appears that the ADB (Asian Development Bank) forecast is fairly close to ours. Let's see what happens in the end. In my opinion, three things need to be done urgently to achieve our growth rate as per the target. First of all, the emphasis should be on increasing consumption expenditure. It is seen that between last February-March and August, people's income has decreased and their consumption expenditure has also decreased. According to the Bangladesh Bureau of Statistics, the daily Ittefaq 7.10.20, 'two-thirds of the families in the country affected by the corona'. The per capita income has decreased by 20.24 percent. In March, the income of a family (khana) was 19 thousand 425 rupees. In August, it was reduced to 15 thousand 492 rupees. In contrast, the cost per family has also come down. The cost per family in March was 15 thousand 403 rupees. In August, it was reduced to 14 thousand 119 rupees. This is a very normal image. ‘Coroner’ is now rising. Soon it will be. But now our responsibility is to increase people's consumption. To do this, people have to increase their income. People have to pay. Export dependence alone will not help us achieve this goal. One of the main sources of increase in consumption is remittances. About 10 million families in the country receive regular remittances. This remittance creates demand in the village.
Remittance money goes to the market equally. People trade more and more. Remittances have increased at an unexpected rate in the last few months due to various reasons. Can this growth rate be maintained? In order to hold on, the obstacles in remittances have to be removed. Has published a series of reports on a daily remittance. The last part of it said, ‘Economic recession, global geopolitical crisis. Violent and diplomatic crisis of middlemen. Is hindering remittances. Meanwhile, the secretary of the Ministry of Expatriate Welfare says differently. According to him, demand in our existing major labor markets has declined. Saudi Arabia is doing Saudiization, Qatar is doing Qatarization. If we discuss all these, it will be understood that the labor market will throw a big challenge in the future. So we need to be careful from now on. The second problem that needs to be solved is the problem of financing small and medium enterprises and businesses. In a report, I saw that the implementation of the incentive package has been 7 percent for adults. And only 3 percent of children. But as we all know, about 40-50 lakh small and medium industries and businesses employ millions of people. This creates a demand for consumption. Again I saw that the distribution of agricultural loans was very bad. Again the central bank says to close the loss branch. What does that mean? Banks in remote areas like Itna, Mithamin, Nikli etc. should also be closed. So what will be their borrowing system? Consumption cannot be increased by neglecting agriculture, villages, remote areas. I hope the Finance Minister will keep that in mind
