Interview
People are suffering, it's undeniable: BB governor
The governor of Bangladesh Bank, Ahsan H Mansur, has spoken to Prothom Alo, over different initiatives to rein in inflation. Fakhrul Islam interviewed him.
It has been 100 days since the interim government took office. Still, inflation remains very high. Why is this situation?
The inflation rate has been excessively high since the previous time, but artificially reduced figures used to be presented. Now, the true picture of inflation is being revealed. The previous government left such a massive hole in the economy… This hole was created through excessive loans, money laundering, and other malpractices. Is it possible to fix all these so easily?
What steps have you taken or are you taking to control inflation?
We have adopted a contractionary monetary policy. Let’s see what else we can do. We are giving a pause for now. We may contract monetary policy further if necessary. We have already raised the policy interest rate in multiple phases. In some countries, it takes up to 18 months for inflation-control measures to yield results. Here, it will take 12 months. This timeline begins not from now but from last July. I am very optimistic.
What is the basis for your optimism?
The cash margin for letters of credit (LC) has been lifted for imports. For some products, import duties have been reduced. Positive impacts of these measures might be felt as soon as next month, nor sometime later. Because, we need to understand that there was a flood in the last month, and it is for the flood to impact the market. Meanwhile, prices of some products went up in the global market. For instance, the price of soybean oil has reached $1,200 per tonne.
Another reason for my optimism is the remarkable growth in exports. In the past four months, export growth has been 10.8 per cent, and in the last month alone (October), it exceeded 20 per cent. Remittance inflows have also been good. If we come to GDP growth, it is true that it would be downward. But it is negative, nor will it be. Our per capita income has not decreased significantly either.
According to you, there should be no problem in opening LCs now. But Bangladesh Bank data shows fewer LCs for some essential items.
Our foreign exchange situation is in a good state now. If any bank does not open LCs or turns away a trader, they should come to me directly.
TCB is selling certain products at subsidised prices to provide relief to low-income people. But each truck only carries goods that are enough for around 350 people, and more people wait in queues. What is the solution?
People are definitely suffering, there is no scope to deny it. We are doing our best to alleviate their hardships as much as possible.