Economy strong enough to achieve 7pc growth – Dr Atiur

Bangladesh’s economy currently stands on a strong ground to achieve the budgetary target of 7 percent GDP growth in 2015-16 fiscal, Bangladesh Bank (BB) Governor Dr Atiur Rahman said in an exclusive interview with daily sun.
During the interview at his office on Monday, Dr Atiur observed that the economy is currently stable.
“We shall achieve 7.0 percent growth. I see no major political instability in the next six months or a year. And, from there the economy will start picking up,” Dr Atiur said.
He said the country’s economy was almost ruined by the three-month blockade early this year, but the situation reversed promptly by steady exports, record flow of remittance and immediate restoration of the domestic supply chain to fulfill the growing domestic demands.
He said the domestic demand is becoming stronger over the past few years while the supply chain also improved significantly that helped keep inflation well managed around the targeted 6-7 percent.
Country’s infrastructure deficit, especially in the areas of road and railway networks, is being addressed by implementation of fiscal development programmes gradually which will improve the supply chain further, he said.
The BB governor said Bangladesh has been producing adequate cereal in the last five years, which led to zero rice import. “Other farm outputs also increased in recent years thanks to adequate flow of credit to the agriculture sector.”
Dr Atiur said rural economy is now becoming similarly important to contribute to national growth as financial flows from banks has been ensured for farmers, marginal farmers and landless farmers, women and a very young group of little-educated population under SME development schemes.
He said remittance is one of the biggest contributors to the country’s growth that gives rural people adequate money to spend on healthcare, education, consumption and capital building, land purchase and setting up enterprises.
“We’ve received record $15.3 billion remittance last FY,” said the BB governor.
“Another good news is that capital machinery and intermediary goods import increased in recent months, which accounted for 65 percent of the total import spending. It indicates more industries to be set up, employment generation and rise in production,” he said.
He said the current account balance may experience a sizable shortfall at end of current FY but it is manageable as there is a stock of adequate foreign currencies.
“Right now, we have a strong forex reserves of $25.0 billion that can cover import spending for over five months,” he said, adding, “Export income and remittance are keeping our foreign currency market stable and there is no sign of immediate deterioration in those areas.”
Dr Atiur said inflation is the only challenge at present and the central bank will continue its efforts to contain it taking into consideration the purchase capacity of the commoners.
“Inflation is well managed around the target thanks to a fall in international petroleum prices and steady flow of money to all,” he said.
He, however, said people are not getting the dividend of low petroleum prices in the international market as the government is trying to reduce its subsidy and pay outstanding debts for previous petroleum procurements.
“The inflation scenario may be eased further with the government’s policy not to raise gas and electricity prices anytime soon,” he said.
He said any reduction in the inflationary pressure may help extend more credit to the private sector that will bring benefit to the economy with industrial expansion and the Bangladesh Bank is pursuing to make it happen.
The central bank last week unveiled its monetary policy, lowering the private-sector credit growth target by 0.5 percent to 15.0 percent from 15.5 percent.
The BB governor said the private sector is receiving adequate credit from local banks and external financial institutions to maintain a sustainable growth.
“Moreover, we are going to introduce two more funds of $300 million and $200 million for the private sector to boost export and promote green industry,” he said.
Regarding investment abroad by Bangladeshi nationals, the central bank chief said they have approved two proposals of Bangladeshi investors–one for setting up a readymade garment unit in Ethiopia, and another for opening petroleum business in Myanmar. “But, right now, the central has no plan to approve investment by local entrepreneurs in agricultural sector in Africa.”
“Bangladesh Bank will do everything for the private sector to support economic growth by putting the country’s interest first,” he said, adding that Bangladesh Bank is the only central bank that has gained global recognition as a pro-development central bank by working on financial inclusion.
He said the they have been trying to take financial services to all segments of people by allowing Tk 10-bank accounts for farmers, elderly people, freedom fighters and destitute people, who receive government allowances.
Dr Atiur said BB has created hundreds of women entrepreneurs across the country by providing low-cost loan under re-finance facility and those women are contributing to their families and the society by employing others.
Taking office as Bangladesh Bank governor in 2009, Dr Atiur had started to pursuing banks to spend more funds under CSR (Corporate Social Responsibility) to educate rural poor and meritorious students, assisting destitute people and giving micro credit without collateral to increase agriculture outputs.
Besides, the BB took up some seven re-finance schemes worth Tk 600 crore to promote cattle rearing, establishing tea gardens, providing credit to marginal farmers and for entrepreneurship development of across the country.
Under the re-finance credit-line, banks provide loan at lower single digit by taking away compensation or subsidy from the BB.
“The impact of such schemes is tremendous. These credit schemes are changing the living standards of people rapidly,” Dr Atiur said.
He said mobile banking is the latest instrument of financial transaction that enabled low-income people to send money from their working stations to near and dear ones at village homes securely, reducing time and relieving the travel hazards.
He said the BB is also considering introducing low-cost housing loan under re-finance facility so that every low-income family can have a piece of land or a home within affordability.
“It will take some time. But, we have a plan,” he said, adding that inflation requires to be eased more and rate of interest of bank loan should be reduced to execute this plan.
D Atiur said the BB as central bank is working independently and there was no influence from the side of the government.
“We do not get any political pressure,” he said.
“I was a teacher. I never thought of becoming the governor. Even, after assuming office, I did not know whether I would be able to discharge my duty duly properly. But, Prime Minister Sheikh Hasina made me do it by inspiration, assistance and advice.”
Regarding the status of the BB governor, Dr Atiur declined to make any comment. As per the warrant of precedence, the governor’s status is on 15th position, which is equivalent to Attorney General, Comptroller and Auditor General, and above secretaries but below the cabinet secretary.
“I do not want this status to be uplifted while I’m the governor. This could be adjusted after I leave the office so that others can enjoy it,” a smiling Dr Atiur said.
“I am the governor of the poor. But, I didn’t do anything to make the rich people suffer. I just tried not to hide myself like my predecessors and always think about doing something better for the common people.”
Dr Atiur was named the ‘Central Banker of the Year 2015’ in the Asia-Pacific region by UK-based The Financial Times-owned magazine ‘The Banker’ in recognition of his unique vision and forward-looking leadership for stimulating growth and stabilising economy.
In 2014, he received the ‘GUSI Peace Prize International 2014’ for his works in the field of economics focusing on the welfare of poor people.
He was also awarded with the Atish Dipankar Gold Medal in 2000 and the Chandrabati Gold Medal in 2008.
“I am a man full of satisfaction. I also consider me as a forward-looking man. Now, I will do what is good for my country.”