The New Nation - Internet Edition

Staff Reporter

The International Monetary Fund (IMF) has warned yesterday that the ongoing snowballing global financial crisis could cut Bangladesh's export earnings and wage earners remittances.

The warnings of the IMF came when a three-member delegation of the international lending agency met Dr Salehuddin Ahmed, Governor of the Bangladesh Bank (BB) at his office in the city.

Thomas Rambaugh, IMF's Asia Asia Pacific regional adviser led the delegation.

The IMF has advised the government to bridle the credit flow in the private sector to contain the inflation rate to a tolerable limit.

The BB Governor told the journalists that after reviewing overall economic situation of the country, the IMF team opined that the global credit crunch might affect the country's foreign remittance flow and export earnings.

"The IMF fears the average inflation rate might soar beyond nine per cent this year due to liberalised private sector credit policy," he said adding the team has also urged the government to brace itself for any relevant crisis.

When asked on what measures the government has taken so far he said, " We assured the IMF team that the government has taken a series of measures to check the inflation".

"The government had cut down the fuel prices in line with the fall in the international market," he mentioned.

In this regard Dr Salehuddin mentioned the bumper production of the last year Boro and predicted good output of Aman paddy this year, which could help keep inflation below nine per cent during the current fiscal year.

"We have been fighting with all our means to overcome the long-lasting problem," he said while mentioning about the bulk of classified loans lying with the banks.

"A big chunk of classified loans in the nationalised commercial banks are really a stumbling block to the ongoing efforts of the government," he added.

Bangladesh Bank statistics shows that credit flow in FY 2007-8 rose 26.11 per cent against 15.12 per cent in the preceding fiscal year.

The first quarter of the current fiscal year (2008-9) has witnessed a 25 per cent credit growth. This year's national budget estimated nine per cent inflation.