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Finance Minister defends devaluation |
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August 13, 2000
Dhaka (UNB) – Defending the latest devaluation of Taka against the US dollar, Finance Minister Shah AMS Kibria yesterday (Saturday) said the value of a currency is relative and needs to be adjusted with other competing currencies. “I would rather call it correction of currency price, not devaluation,” he told a discussion of Bangladesh Economic Association (BEA) in the morning. In a major downward adjustment, Bangladesh Bank Thursday fixed the middle rate of a dollar at Tk 54 from Tk 51. The Finance Minister termed the step “correct and timely” and believed it would have been much better if done earlier. He urged all to keep it above politics. “We don’t have any fundamental (political) difference on economic issues,” he said disapproving criticism of currency adjustment out of “misconception and regardless of its merits.” Such corrections may benefit some quarters and cause loss to others, but the government will have to look after national interest, Kibria said. He said although Bangladesh economy is import-dominated, “but importers are not everything.” Growth, export, remittance, and prevention of `hundi’ transaction and smuggling — all these factors were considered in making such adjustment, he pointed out. The finance minister argued that the ratio between exchange rates of Bangladesh and India against dollar was also very relevant given the huge volume of formal and informal trade between the two countries. The question of how many times such correction took place in a certain period is irrelevant as globally dollar is moving up while other currencies are going down, he said. “Taka has become overvalued because of relative fall of the value of the currencies of other trading partners,” Kibria said. In this regard, he mentioned that the value of taka fell at a lesser rate even than that of strong economies like Singapore, Thailand and Korea. Giving three year statistics of downward adjustment of some Asian currencies, he said Bangladesh’s currency adjustment stood at only 14.4 per cent between June 1997 and June 2000 while that of India was 19.8 per cent, Indonesia 71, Korea 20.3, Malaysia 33.6, Pakistan 22.5, Philippines 38.9, Singapore 17.3, Sri Lanka 23.8 and Thailand 34.5 per cent. Responding to a point raised by a discussant, Kibria appreciated the World Bank’s recent concern about governance, but there was no such concern against two consecutive autocratic regimes that bred corruption in administration and made politics saleable. He expressed concerns about the deteriorating standard of education, as pointed out by Dr Binayak Sen. He called upon economists and social scientists to assess the loss of productivity as lakhs of students are joining madrasah stream. The finance minister said: “Spiritual needs of the society must be met. But is there any need at all of such a huge number of students in madrasah, who won’t be fit even for 19th century?” Economic Relations Division (ERD) secretary Dr AKM Mashiur Rahman moderated the discussion also attended by BEA president Prof Wahiduddin Mahmud, and economists Dr Binayak Sen and Sadek Ahmed. The Association honoured Saogat Ali Sagar, economic reporter of the Prothom Alo, for his series reports on problems and prospects of industrialisation in the northern region. Economist of Bangladesh Institute of Development Studies (BIDS) Dr Binayak Sen objected the observations of some economists that politics is the fastest growing business in Bangladesh and that politics hinders economy. If it’s so, politicians shouldn’t be blamed unilaterally, because social elite is also engaged in this business, he felt. Dr Sen said Bangladesh achieved success in attaining higher social value even after remaining in the level of smaller income. He cited Bangladesh’s success in bringing down fertility rate, achieving food autarky and maintaining a steady growth. |