Bangladesh Bank Governor Dr. Atiur Rahman said price volatility in global commodity markets remain a major vulnerability for Developing Asia pacific (DAP) countries as sudden sharp food price spikes increased risk of hunger, particularly for the urban poor.

Food grain growers, on contrary, suffer for steep price fall as supplies improve, he said adding, commodity price stability beneficial for both producers and consumers can be usefully supported by maintaining modest publicly-owned buffer stocks as cushion.

Low income DAP countries while building up such food grain buffer stocks may usefully be assisted by budget support financing from the International Monetary Fund (IMF).

Atiur, presently in Tokyo as a member of the Bangladesh delegation to the IMF-World Bank Annual Meetings 2012, said this at a special event for Frontier and Developing Asia and Pacific countries on October 14, 2012.

Atiur said Bangladesh and other low income DAP countries need continuing support in growth and poverty eradication efforts.

He was exchanging views on continuing vulnerabilities to global shocks and the role of IMF in supporting the region’s growth momentum.

The event was chaired by the IMF Managing Director Christine Lagarde and was participated by senior government and central bank officials and IMF senior management team.

Expressing concerns over the global economic slowdown, Lagarde stressed on greater surveillance for risk mitigation to overcome the situation.

In his speech, Dr Atiur said IMF’s global policy surveillance needs to remain proactive in countering these trends, to protect and further widen openness of advanced economy markets to goods and services from the DAP.

Countries in South Asia and the broader DAP region have in recent past concluded several new agreements for freer bilateral and regional trade, he quoted saying, “The DAP region can benefit from IMF support in activating trade under these initiatives.”

“Despite low levels of policy interest rates in and outside the region, access to trade financing has remained relatively more constrained and expensive following the global crisis,” he added.

In recent years, speculative position taking by financial institutions in commodity futures markets has tended to exacerbate price volatility, Atiur said adding, IMF’s global policy surveillance may proactively pursue adoption of global discipline barring speculative position taking in commodity futures by financial institutions or other entities with no stake in supply chains of the commodities concerned.

Upholding domestic demand driven component of output growth in low income member economies would require IMF financing support agreements to avoid imposing conditions hurting well-being of the poor, instead keeping the brunt of adjustment burden on the better off.

To this end, IMF assistance programmes may also include financing for member country’s own targeted initiatives supporting output activities of farm and non- farm small businesses including start ups, stressed the BB chief.

Low income DAP countries also need IMF support in putting in place sustainable, affordable social safety nets for the poor; in appropriately structured retirement and pension savings schemes.

IMF can increase its presence in local field offices for first-hand appraisal of the needs and concerns of DAP countries facing shocks from turbulences in the global economy, Atiur recommended.

The representatives are very effective and generally so are the TA support. But still compared to other partners, the IMF is very HQ centric in staffing and this could be rebalanced, he suggested.

Dr Atiur also attended the SAARC Finance meeting on the same day which was participated by finance secretaries and central bank governors of all South Asian nations.

Caption

Bangladesh Bank Governor Dr. Atiur Rahman seen with IMF Managing Director Christine Lagarde in the IMF-World Bank Annual Meetings 2012 in Tokyo, Japan.

News: The Daily Sun/Bangladesh/15th-Oct-12