The New Nation - Internet Edition

UNB, Dhaka

Finance Adviser Dr Mirza Azizul Islam expects that the economic growth would be reaching around 6 percent in 2007-08, belying the projections of international agencies, as he sees signs of recovery in the major indicators.

He was also hopeful that the foreign exchange reserve would remain at around US$ 6 billion by the yearend despite increased imports, mainly the food items.

He was talking to UNB at his Planning Ministry office Wednesday on the country's economic challenges and prospects. "As per the latest data, we're reaching around 6 percent (GDP growth)," he said, showing recovery in export growth, recently increased credit to private sector, increased raw material imports, revenue growth and favourable foreign aid.

The World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) projected that Bangladesh's GDP growth would be at 5.5 percent while London-based Economists Intelligence Unit (EIU) projected it to be 5.7 percent.

The Bangladesh Bank has also been expecting that the country's GDP growth would be around 6 percent. Asked about the side risk of slow export growth to the GDP as economic growth in the USA and the European Union, Bangladesh's major export destinations, have been projected to be much lower, he said there could be a positive impact on Bangladesh's export growth as the consumers in the developed countries would prefer low cost items in a slowed down economic condition.

On the other hand, he added, Bangladesh exports low-cost items to those countries that might result in positive impact on the country's export growth.

Meantime, Dr Aziz said, the country's exports have already recovered from a negative growth by the end of December, 2007 and turned positive.

He said the export growth has already reached 7-8 percent by the end of February as Commerce Secretary Feroz Ahmed apprised the Adviser. The February figures from the Export Promotion Bureau (EPB) have not been released yet.

The Finance Adviser was expecting that the export growth would reach 13-14 percent by the yearend (June 30, 2008).

The government had set an export target of US$ 14.5 billion for the current fiscal year with a 19 percent growth over the previous fiscal year's export performance of US$ 12.18 billion. During the first half of the current fiscal year, the exports grew by over 4 percent to US$ 6.5 billion, which was 8 percent lower than the period's target of US$ 7.1 billion.

He thought the lone negative side of the economy still remained in slow capital machinery imports, and said new investment is lower because entrepreneurs prefer utilising installed capacity at some points of time. "I'm not worried about the inflow of foreign aid," he said, giving a positive note that the foreign aid disbursement would be favourable during the fiscal year.

About the possibility for the foreign exchange reserve to decline due to increased imports, the Finance Adviser said the reserve declined from US$ 6 billion-mark to just over US$ 5 billion due to the bimonthly payment of US$ 730 million plus to ACU. The forex reserve is, however, unlikely to decline too much and it would remain at around US$ 6 billion by the yearend if the exports recover to the extent now expecting and the remittance inflow maintains the current pace.

A Bangladesh Bank senior executive said the ACU payment has zero impact on the reserve as they settle the import payments after two months from the foreign currencies paid by importers against their imports in advance.

"There is hardly any reason at present for the reserve position to fall sharply," he said, adding that they were expecting the reserve would remain at more than the US$ 6-billion mark at the end of June this year.

He said they were also expecting that the remittance would stand at around US$ 7 billion compared to over US$ 5 billion in the last fiscal year.