Democracy crucial for development: Farashuddin

Former governor of Bangladesh Bank Mohammed Farashuddin has underlined the need for objective analysis of why increasing public investment has not yet contributed to creating enthusiasm for more private investments.

Emphasising democratic consistency for attaining higher economic growth in a sustainable manner, he mentioned that the Bangladesh economy has grown at a faster rate since the restoration of democracy.

"The return to democracy after 1990 has opened the door of prosperity. Since then, Bangladesh has achieved a growth rate not below 5 per cent," he told a seminar on "Tomorrow's economy: Bangladesh perspective" at East West University on Saturday.

"Where there will be a democracy and people's participation [in various activities], economic growth will be sustainable," said Farashuddin, who was a central bank governor during the ruling Bangladesh Awami League's 1996-2001 tenure.

He identified the stagnation in private investment as a major problem of the economy at present.
Also, the finance minister recently admitted that private investment remained a cause for concern for the government.

The former governor called upon the government to review the situation and take necessary steps to attract higher private investment.
Dwelling on the decline in remittances earning, Farashuddin pointed out that contractionary monetary policy is encouraging the wage earners to send back money through informal channels.
He stressed on formulating expansionary monetary policy and adjusting currency exchange rate for correcting the situation.