Economic Reporter :
Economists support the government’s move to use the forex reserves for implementation of mega infrastructural projects but suggest framing a modality carefully to use the idle reserves which crossed the US$31 billion mark recently.
Talking to the New Nation former adviser to caretaker government Mirza Azizul Islam, former governor of Bangladesh Bank Salehuddin Ahmed, executive director of Centre for Policy Dialogue Dr Mustafizur Rahman and chief economist of Bangladesh Bank Biru Paksha Paul said the use of the reserves for implementation of big projects, especially the infrastructural ones, is a good initiative for the economy.
But the government needs to frame a modality consciously first on how it will take the loan from the reserves, what will be the interest rate and repayment period, say the economists.
According to Bangladesh Bank, the reserves stood at $31.2 billion on September 2 which is good enough to clear import bills for the next nine months.
“It is a good move because there are huge forex reserves remaining idle and if the government can use this money for implementation of development projects it would not have to go for costly foreign funds,” said Mirza Azizul Islam.
He added the country needs investment for the development of infrastructure and if the government takes loan from the reserves for this purpose it would certainly be good for the economy.
Dr Salehuddin Ahmed said the forex reserves are huge and the amount needs to be used through proper planning for implementation of big projects such as construction of power plants and other infrastructural ones. But the government needs to be careful about the amount it would take as loan from the reserves, repayment period and interest rate, he added.
Before borrowing a big amount from the reserves for a long period, the government needs to keep a restorable amount in hand for foreign debt services, he said, adding that it also needs to take into account the trend of inflow of foreign currencies, including remittances.
“I personally think it is a good initiative. Over $31 billion is a very comfortable amount even if we take into account the foreign currencies we need to pay interest against the country’s foreign debts and import bills,” said Mustafizur Rahman.
He added that it would be good for the economy if the government borrows from the reserves for investment. The reserves have a cost also because Bangladesh Bank buys foreign currencies from banks for maintaining stability in forex market and if the government borrows from the reserves and pays interest then it is good for the both.
He suggested the government to frame a plan for the use of forex reserves.
“It is like that we are gaining fat without burning it,” said BB’s chief economist Biru Paksha Paul who termed the existing forex reserves as more than adequate. The country needs to increase investment that will increase import bills, he added.
He said if a portion of the reserves is invested for mega projects such as construction of metro rail then the import will be increased because the country needs to import construction materials for it.
