AMA Muhith

The government is still undecided over the key donor condition of giving more authority to the central bank over the state-run banks, despite not having much time in hand.

The parliament must pass the Banking Companies Act as well as the VAT Act within the next month for the country to be able to get the second instalment of $1 billion from the International Monetary Fund (IMF).

"Still, there is no consensus over the reforms in the Banking Companies Act," said Finance Minister AMA Muhith.

Providing full control to the Bangladesh Bank over the state-run commercial banks remains a sticking issue of the Banking Companies Act.

"We have informed the IMF about our position and they have informed us of their decision. They want to see the language of the law [before it is passed]. I told them that would be possible,” Muhith told The Daily Star in Tokyo on Saturday.

The IMF wants the government to cut the authority of the Banking Division, a wing of the finance ministry, and give more power to the central bank -- to allow it to control the state-run banks.

Muhith said there would be some delay as he would not be able to do anything until he returns from Hajj.

"It is now in my hand, with the ministry. Bangladesh Bank has sent their proposals. The committee we have formed has also sent its proposals. We are ready, but I want to think over it a bit."

With regards to the VAT reforms, Muhith does not think that the IMF conditions are serious.

The finance minister, however, is hopeful Bangladesh would receive the loan from the IMF in

November.

The lender has approved $987 million for Bangladesh to help it overcome macroeconomic pressures and build a buffer reserve, with the first of the seven instalments already received last year.

"Our domestic demand is good. But the export has a major impact,” said Muhith, who is in Tokyo to attend the semi-annual meetings of the World Bank and the IMF.

He added that the Eurozone debt crisis is risky for Bangladesh as the continent is home to about half of the country's exports -- and the growth potential of the country is heavily reliant on exports.

Although exports grew by 3-4 percent in the last three months because of the slowdown in the European Union, the government is hopeful that it would grow by 10-11 percent in the current fiscal year, according to Muhith.

At the meetings, the IMF forecast that Bangladesh's economy would grow by 6.1 percent in the 2012 calendar year.

Naoyuki Shinohara, a deputy managing director of the lending agency, said the country's GDP would grow by 5.8 percent in the current fiscal year.

“The IMF projection is always low, which is globally more or less accepted,” he said.

The WB and Asian Development Bank projections are higher, as per Muhith.

"But the actual performance of the country depends upon God."

Muhith said he himself asked the IMF about its opinion.

"They have publicly and privately said there is consensus between the countries which are under trouble and the countries who can afford to help others. Its result will be positive."

"When there is any consensus the situation can be brought under control, even if you do not get out of it. It is good news for us."

Muhith said he has told the new WB president -- who says has only one goal in his mind, that of poverty eradication -- that he has to act differently to meet his targets.

"I have told the WB that there is poverty in high-, middle- and low-income countries. But the poverty of high- and middle-income countries is not comparable to that of the low-income countries."

"You will have to think differently if you want to eradicate poverty in other [lower income countries] countries."

"I hope that perhaps he would consider this plea seriously as he is so focussed on poverty. I have been making the same plea for the last three years."

Muhith said the low-income countries do not receive special benefits from the policies of the WB and the IMF, although they are the ones most in need of the facility.

"It was discussed significantly at the meeting of the finance ministers of Commonwealth countries."

During his visit, Muhith met Japan's Deputy Prime Minister Katsuya Okada, had lunch with Japan-Bangladesh Parliamentary League and held meeting with the Foreign Correspondence Club of Japan.

About Japanese investors' eagerness to invest in Bangladesh, the minister said Japan has long been trying to invest in Bangladesh but the country is not being able to provide adequate land.

"I think Japanese investment will flow to Bangladesh if we can provide them land."

He said Bangladesh would have to keep in mind that Japan has got another place in Myanmar to invest.

Muhith said the government would sign an agreement with Japan to set up metro rail.

"It has already been decided. The Japanese government has already taken the decision. The issue has been stuck because of some small issues."

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