Foreign exchange reserve stood at $32 billion in December from $22 in January in 2016 despite the theft of $81 million from the Bangladesh Bank reserve in the New York Fed. In the meantime, bad loans in the country’s banking sector increased by 24.57 percent to Tk 54,173.35 crore in the first nine months of the outgoing year from Tk 43,485.71 crore in December 2015. And the private sector credit growth decreased which showed a decline in the interest of businesses to expand their business despite huge liquidity in the banks.
The country’s business sector is yet to get rid of a dull situation although there was no major political tension in 2016. Imports of industrial raw materials and intermediate goods did not increase much that could support the good growth in private investment. Stagnation in the ratio of private investment to Gross Domestic Product and ever increasing rise of capital flight, coupled with regulatory unpredictability in economic management appeared to be the major challenge in the economy.
In the absence of proper monitoring, dishonest businesses will siphon out money by over or under-invoicing. The suspicion is based on the Global Financial Integrity that reported that capital flight from Bangladesh surged 33.78 percent year-on-year to $9.66 billion in 2013. The government should offer incentives so that local investors feel encouraged to make more investment in the county. In the new reality of BD-China relationship, it is high time to rethink the private investment. The negative growth in remittance despite a good number of overseas job employments in 2016 is attributed to the economic slowdown in the Middle East countries, main sources of the country’s 60 percent remittance flow, and the increased ‘hundi’ operation.
To overcome all such obstacles is not an easy task but establishment of good governance in financial institutions, diversity in the export basket and promoting investment-friendly climate can help the government to get success.
