Policy Research Institute - PRI Bangladesh

The Policy Research Institute of Bangladesh (PRI) is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of the Bangladesh economy, its key policy challenges, domestically, and in a rapidly integrating global marketplace.

Atiur for external financing at affordable cost

News Published: Monday, Jul 08, 2013

Atiur for external financing at affordable cost

MONDAY, 08 JULY 2013

DHAKA, JULY 7: Speakers at a discussion on Saturday warned the government of   various risks factors while going for a wholesale external financing.

“Two major risks in wholesale external financing are possible currency miss match and problem in debt servicing,” said Mirza Azizul Islam, former advisor to a caretaker government.    He gave example of economic crisis in late 90’s in East Asian countries which had faced tremendous problem in debt serving and currency mismatch following a whole sale external financing.

Aziz suggested the private companies to go for capital market for adequate financing. On the other hand, there is access liquidity of Tk 71,000 crore in the banking sector, he pointed out.

Speaking as chief guest, the governor of Bangladesh Bank Dr Atiur Rahman  observed that both public and private sector in the country need adequate access to external financing at affordable costs.

“Nobody disputes the fact that realizing our growth aspirations will require more investment resources than are available as domestic savings,” he said while addressing as chief guest at a discussion on ‘international financing 
as a catalyst for growth’ at a city hotel.

Policy research institute PRI a non-government think tank organised the discussion with former finance minister M Syeduzzaman, in the chair. Executive director of PRI Dr Ahsan H Mansur and Ifty Islam presented two key note papers on the subject.

Dr Hassan Zaman, chief executive officer of Bangladesh bank, Muhammad Aziz Khan of Summit group and Fridtjof Rusten of grameen phone also took part in the discussion.

Participating in the discussion, Mirza Azizul Islam warned the government of various risk factors while going for external financing. There two major risk of external financing those are possible currency mismatch and problem in debt serving.

Rahman pointed out that the country is already close to the lower middle income  group per capita GNI threshold, so time has come to give attention on the next milestone of reaching the upper middle income country group threshold, by 2030 or earlier. 
Mobilizing investment resources for this growth path will require accessing global capital flows by integration of our financial sector with international financial markets, he observes.

The BB governor, however, emphasised on a cautious approach in this regard as the cautious approach has served us well in making steady, stable economic progress avoiding slippery slopes of debt default and balance of payment crisis from excessive external debt.

He also told the gathering that in the private sector, entrepreneurs were free to attract external equity finance thru both FDI and FPI routes.