NEWS report in a national daily on Friday said foreign currency reserves at the central bank has crossed $23 billion for the first time in the country’s history banking on steady export earning, remittance and lower oil prices. The report quoted a central bank functionary as saying ‘the reserves are adequate to meet import bills for the next seven months.’ He said expenditure on fuel import has almost halved but other imports such as machinery and raw materials have gone up recently. Imports have not declined, foreign currency earnings have gone up steadily, he said.
We must say the rising of the reserves at a new height is highly appreciable. We welcome it but we wonder at the same time whether or not the government has the capacity to use the fund to accelerate the country’s pace of economic development. Because, mere spilling over of reserves is not the right indicator, when our earnings have phenomenally increased it also raised question why the spending in productive sectors is not rising in the same space to take benefit of the huge reserves. There is no question that it depends, besides on the capacity of the government also on the business climate and investment risks and opportunities for the country’s private sector. Had there been a stable government working in peace, the government would feel safe to use its manpower and institutional capacity to take up big infrastructure projects. The private sector would similarly feel highly encouraged to take up other big projects in industrial and service sectors as well as in health, education, telecommunication and such other core sectors to move the nation forward. It could create more demand for capital goods and intermediary and probably the GDP growth could have been over 7 to 8 percent given the current level of reserves and the uninterrupted flow of export earnings and remittances.
Moreover question arises when the country is witnessing a long-term blockade and other political violence bringing the wheel of business and economic growth to a halt, how can we justify the rise in imports, especially of capital machinery and raw materials when no big project is rolling in this violent climate. Most people now fear that more money is now moving out of the country under fake import bills than it is being used to import goods for real business and other industrial development. The fact that oil import bills has almost halved and yet the country’s imports have grown by 18,28 percent in term of money spending in the first six months of the current fiscal is a big question. We ask the central bank not to be content with the high reserves but to ensure the proper use of the reserves in productive sectors of development.
We must say the rising of the reserves at a new height is highly appreciable. We welcome it but we wonder at the same time whether or not the government has the capacity to use the fund to accelerate the country’s pace of economic development. Because, mere spilling over of reserves is not the right indicator, when our earnings have phenomenally increased it also raised question why the spending in productive sectors is not rising in the same space to take benefit of the huge reserves. There is no question that it depends, besides on the capacity of the government also on the business climate and investment risks and opportunities for the country’s private sector. Had there been a stable government working in peace, the government would feel safe to use its manpower and institutional capacity to take up big infrastructure projects. The private sector would similarly feel highly encouraged to take up other big projects in industrial and service sectors as well as in health, education, telecommunication and such other core sectors to move the nation forward. It could create more demand for capital goods and intermediary and probably the GDP growth could have been over 7 to 8 percent given the current level of reserves and the uninterrupted flow of export earnings and remittances.
Moreover question arises when the country is witnessing a long-term blockade and other political violence bringing the wheel of business and economic growth to a halt, how can we justify the rise in imports, especially of capital machinery and raw materials when no big project is rolling in this violent climate. Most people now fear that more money is now moving out of the country under fake import bills than it is being used to import goods for real business and other industrial development. The fact that oil import bills has almost halved and yet the country’s imports have grown by 18,28 percent in term of money spending in the first six months of the current fiscal is a big question. We ask the central bank not to be content with the high reserves but to ensure the proper use of the reserves in productive sectors of development.
