The New Nation - Internet Edition

UNB, Dhaka

Bangladesh Bank Governor Dr Salehuddin Ahmed has alerted development partners of possible adverse economic impact on Bangladesh, if there is foreign assistance slowdown as fallout of global financial crisis.

He rang the alarm bell at an international roundtable on "Impact of Financial Crisis in South Asia" on the sidelines of IMF-World Bank Annual Meetings in Washington D.C. on Friday, according to a message received here yesterday.

"If the Official Development Assistance (ODA) and bilateral fund flow slows down, pressures on government budget will be strong and may affect government's ongoing poverty alleviation, social safety net, health and education programmes," Dr Salehuddin told the meeting.

Nobel Laureate and former chief economist of the World Bank Prof Joseph Stiglitz, former chief economist of IMF Dr Ragu Rajan and governors of the central banks of Pakistan and India also spoke at the meeting, dwelling on the possible impacts of the financial crisis.

Governor Dr Salehuddin Ahmed put the Bangladesh perspective as a possibility of long term consequences of the financial crisis. "If the global crisis is prolonged and deepened in the developed countries, the effect via real sector like export and import may have adverse impact on Bangladesh."

He said the commercial banks in Bangladesh are not very much exposed to the banks and investment firms in the USA and Europe. Therefore, the ripples of financial shock into the financial systems would be less likely in the short run.

Besides, he said, the commercial banks in Bangladesh were taking appropriate measures so that their funds kept in the banks abroad are not adversely affected.

"The liquidity position of the commercial banks in Bangladesh is good and no commercial banks have come to the central bank for massive liquidity support or they did not request for support for insolvency."

Addressing the meeting, Prof Stiglitz said the present global financial crisis is due to inadequate regulation and poor supervision of the banks and investment firms in the USA.

Dr Ragu Rajan emphasised on comprehensive package for overcoming the problem to boost confidence again.