Bangladesh Bank (BB) Governor, Dr Ahsan H Mansur officially stated on Saturday that the country's foreign reserves have now exceeded $20 billion while remittance inflow remained stable reaching $3 billion in the last five months. In addition, the 10 banks reportedly stood on the verge of bankruptcy, have now turned around. The situation is improving.
However, the governor's statement is encouraging enough to hope that the country's banking and economic sector will recover and be strengthened further. Moreover, growing concerns about a possible collapse in the banking sector have eased, as both our public and private banks are gradually getting stabilized.
While the recovery is promising, political instability and uncertainties yet prevails. Regular incidents of anarchy, chaos and vandalism continues to impede country's economic growth. Inflation hovers at double digit numbers. The continuing instability is manifestly affecting the broader economic environment by disrupting business operations and creating an unpredictable financial climate.
What is even more, economic challenges faced by Bangladesh, including a large deficit in global trade in recent months following the July Uprising and Interim Government's assuming office had manifestly poised a serious threat. Only good that the threat is waning.
Least to say, the ongoing political crisis can significantly slow down economic growth, breed uncertainty while undermining investor confidence. As a result, both domestic and foreign investors can get discouraged, leading to reduced private investment.
The point, however, the Interim Government has a crucial role to navigate through these economic challenges and particularly, laying the groundwork for a stable transition to an elected government. That said- immediate economic priorities should include combating inflation and restoring macro-economic stability.
For nearly a decade and half, the actual state of Bangladesh's banking system remained obscured by political interference and flawed policies during Sheikh Hasina's 15 plus years'misrule. The perilous extent had become painfully clear after her exit.While the previous government had continuously rejected demands for reform, the Interim Government's policy makers moved swiftly to address systemic irregularities and implement a broad reform agenda.
Yet despite all prevailing challenges, it is only positive that accountability and discipline is being restored within the banking sector.
Our expectations from the Interim Government, however, is to quick introduce reforms to tackle high-level of non-performing loans, poor governance, corruption, inadequate risk management, and regulatory weaknesses within the banking sector.
And to restore public confidence, it is essential to strengthen transparency, enhance regulatory oversight, and ensure sound financial practices - all three at the same time.
We believe remittance inflow would continue and increase in the days ahead while our foreign exchange reserve would get bigger.
