Maintain adequate funds, low interest to rescue economy

Adequate funds and a low interest rate should be maintained in the financial sector until the economy fully recovers from the effects of the pandemic, suggests former Bangladesh Bank governor Atiur Rahman.

"The government has taken multifarious initiatives, including declaration of different stimulus packages, in managing the impact of Covid-19. Some of the government's quick responses should be continued so that the economy recovers completely," he said.

Rahman applauded the central bank's recent initiatives such as the changes brought to cash reserve ratio, repurchase agreements and advance deposit ratio to boost liquidity in the money market.

His remarks came at a webinar titled "Inclusive finance and macroeconomic transformation of Bangladesh" organised by CFA Society Bangladesh. The programme was streamed live on the Facebook page of the society and The Daily Star on Friday.

The society is a local member of the CFA Institute, a global association of investment professionals that sets the standard for professional excellence and credentials, ethics and education.

Rahman mentioned that the government has initiated 21 stimulus packages worth $13.25 billion, amounting to 4 per cent of the GDP.

He said despite the worldwide lockdown, Bangladesh experienced a stronger V-shaped recovery due to the pragmatic and timely initiatives of the government and Bangladesh Bank.

"Prudential policies coupled with good agricultural output, robust remittance performance and export growth in recent months helped the country combat the impact of the pandemic," he said.

Rahman also said the growth rate for fiscal 2020-21 would be higher than the 6.8 per cent projected by Asian Development Bank because of growing labour productivity and enhanced economic resilience.

He emphasised development for the real economy, cottage, micro, small and medium enterprise (CMSME) sector, women entrepreneurship and digital finance to strengthen the financial pillars of the country.

Rahman also stressed on taking initiatives to enable a convenient payment gateway for freelancers and facilitate a digital and green transformation to put the country in a higher growth trajectory.

Md Shah Naoaj, secretary to the society, moderated the session.