In a transfer unprecedented in Bangladesh's financial historical past, the federal government has determined to make use of 524.56 million eu
In a transfer unprecedented in Bangladesh’s financial historical past, the federal government has determined to make use of 524.56 million euros (Tk 5,417 crore) from the international trade (foreign exchange) reserves for the dredging of a channel for Payra Port in Patuakhali, as a part of a plan to make use of the reserves for high-priority growth initiatives. That is the primary undertaking to be bankrolled from the Bangladesh Infrastructure Growth Fund (BIDF), which was set as much as lend cash from the reserves. In response to the finance ministry, the federal government will solely use the fund to spend money on initiatives that may have a excessive fee of return, and annual funding from BIDF wouldn’t be greater than USD 2 billion. Initially, solely initiatives associated to the port and energy sectors shall be thought of.
There is no such thing as a denying that the choice to make use of foreign exchange reserves, meant to fulfill a rustic’s exterior obligations, for such functions possibly extremely consequential. The problem has been in dialogue for some years now. Regardless of considerations raised by some economists, the federal government has determined to offer it a go-ahead hoping it’ll usher in hefty returns and in addition assist save on foreign currency echange spent in initiatives the place prices usually shoot up because of the rates of interest and different hidden prices of international loans. The financial argument of utilizing surplus foreign exchange reserve in worthwhile growth initiatives might sound convincing, nevertheless it all relies on how rigorously and judiciously the federal government chooses and implements these initiatives. The federal government has laid out a lot of pointers on this regard. It has additionally sought to deal with considerations in regards to the want for maintaining ample reserves by stating that reserves shall be maintained to cowl six months of import payments—a problem that shall be noticed carefully going ahead. As regards considerations about its possible discouraging results on international lenders and international direct funding (FDI) in Bangladesh, the federal government has to make sure that nothing of this kind occurs.
We’re nonetheless within the early phases of this new growth and lots stays to be seen about how the federal government goes about it sooner or later. Given the very legitimate considerations about inner governance points that usually result in monetary corruption and losses, it is going to be advisable to tread rigorously on this concern and take into account the Payra Port undertaking slightly as a check case for the way the idea of utilizing foreign exchange for growth initiatives works. In any case, the considerations of economists should be addressed with the very best precedence and it should be mirrored in all future actions and selections. Solely then can we be actually assured of the feasibility of this extremely uncommon resolution.