Curbing inflation top priority

Reining in inflation, stabilising the volatile exchange rate and shoring up the foreign currency reserves are among the major priorities for keeping the economy afloat, newly appointed Bangladesh Bank Governor Abdur Rouf Talukder said yesterday.

Both the government and the central bank have already taken some measures to contain the soaring inflation, he told journalists at the central bank headquarters after joining office as the 12th BB governor.

Inflation has gone up recently due to high import payments and an increase in commodity prices in the global market, he mentioned.

Inflation surged to an eight-year high of 7.42 percent in May, according to data from Bangladesh Bureau of Statistics.

"I'll go the extra mile to bring back stability in the exchange rate," he said.

The exchange rate of the taka stood at Tk 93.45 per dollar yesterday in contrast to Tk 84.80 a year ago.

"My third priority is to strengthen the foreign exchange reserves so that we have reserve assets enough to settle import bills for more than six months," he said.

The country's foreign exchange reserves rose to $48 billion at the height of the coronavirus pandemic, he pointed out.

Rouf said the country had to spend an additional $9 billion to import nine products, including petroleum, wheat and fertilisers, last fiscal year due to the price hike of the items in the international market.

The reserves dropped to $39.80 billion yesterday for the first time in nearly two years. It stood at $46.15 billion in December last year, shows BB data.

The new governor's another priority is to keep the financial sector stable.

"The banking sector has performed well enough. One or two banks might have been in trouble," he said.

The central bank will put emphasis on reducing defaulted loans, and efforts will be made to enhance the capital base of banks, said the new BB governor.

About non-bank financial institutions (NBFIs), he said the majority of them are doing well, but a few might have been facing problems, which is why common people have a negative impression about them as a whole.

"We will work to win back people's trust in the NBFI sector."

The central bank will try to increase the credit flow to the private sector so that new jobs can be created, Rouf said.

Asked whether the BB would withdraw the 9-percent interest rate cap on lending to contain inflation, he said no commercial bank faced any loss so far due to the ceiling.

The country earlier had maintained a high interest rate on lending, which is rare in the world, he noted.

"Many economists have frequently criticised the initiatives taken by the central bank and the finance ministry … We know which measure is good for the economy."

Responding to another query, he said the BB will reduce its intervention in the foreign exchange rate but it will use the required tools to control the rate.

Rouf replaced Fazle Kabir whose six-year tenure ended earlier this month.

He holds an MSc in Development Management from the University of Birmingham, and an MBA from the Institute of Business Administration of Dhaka University.