ME crisis, oil price worry Muhith

Finance Minister AMA Muhith yesterday expressed his worries about the Middle East (ME) crisis and oil price hike, saying the untoward events and trends may impact the country's remittance inflow and foreign currency reserve negatively.
Muhith said this while presenting a report in parliament on budget expenditure and economic situation of the country in the first six months of the current fiscal year.
The finance minister said, while it is imperative to increase the public and private sector investments, a rise in fuel and food prices on the world market may fuel expenditure on imports. As a result, the foreign exchange reserve may fall significantly in future, he added.
According to the report, by the end of December 2010 the foreign exchange reserve was $11.2 billion, while Bangladesh Bank data show the reserve is already on a downward curve. On March 8, it stood at $10.36 billion.
On the remittance situation, the finance minister said, under the prolonged impact of the global recession the export of manpower to the Middle East labour markets decreased in the first quarter of the current fiscal year causing a downslide in remittances.
But in the second quarter, the remittance inflow improved slightly owing to some measures taken by the government, he added.
The minister said the remittance inflow will return to normalcy in future but, at the same time, he expressed apprehension that the recent upheavals in North Africa and the Middle East may delay the maturation of the government initiatives.
In the report, the finance minister dwelt on the inflation situation and said the whole world has been experiencing a rise in inflation due to a hike in food prices.
The minister said, due to the rise in the fuel prices on the international market, and as the food production did not evenly meet expectations throughout the world because of adverse weather, the prices of food commodities will continue to shoot up globally.
As Bangladesh is an import dependent country, its economy experienced an adverse impact. Besides, the pressure of high inflation in India had weighed on inflation in Bangladesh.
However, the finance minister said, since the economic trend was satisfactory in the first six months of the current fiscal year, the GDP target of 6.7 percent may be achieved after all.
On the progress of Public Private Partnership (PPP) initiative, Muhith said the PPP policy has already been gazetted. He said the PPP offices have been set up and manpower has been appointed to some offices. The process of appointing the chief executive of PPP initiative and some other officials is underway.
The registration of Bangladesh Infrastructure Finance Fund as a company will soon be completed, the finance minister said. Once these activities are complete, various projects will be financed through the PPP initiative, he said.