As taka keeps falling against dollar, fear looms large that the situation might deteriorate if black money is again allowed in the stock market.
Many think that a major reason for taka losing ground is that a huge chunk of the money gained through the stock market during the recent boom has been taken out of the country. The boom was fuelled by use of black money.
Right now nobody has any exact idea of how much money had been skimmed off the market and how much of it was taken out. But those in the know think it is substantial.
For example, an owner of two textile mills had raised money through IPO and settled in Canada under business immigration. This man is also known to be close to ruling Awami League.
Another bigwig's son is said to have bought a private aircraft which he keeps in Dubai. It is now an open secret in the city.
But even without the working of black money in stocks, taka is likely to come under severe strains in the coming months for two major reasons.
First, the requirement for diesel import will drastically increase because of setting up of quick rental power plants. Two years ago, the total fuel import was 3.5 million tons which has increased to 5.2 million tons this year. It is expected to increase by over 40 percent to 7.2 million tons.
With oil price hovering over $110 a barrel and rising, a huge amount of dollar will be required to import this quantity. This will surely put taka under strain.
In addition, high commodity price will keep pressure up on foreign exchange reserves.
Secondly, inflow of dollar looks feeble. Remittance flow has stagnated. Export has increased significantly. But the fact remains that a little of that export proceeds can be retained because over 75 percent of the earning is from readymade garments. And in garments sector, the chunk of the proceeds is again used to buy cotton, yarn and fabric. So the net retention of foreign exchange is little.
On the other hand, for a population of 160 million, import of fabrics and yarn for local consumption is huge and none of it is re-exported. So when the global commodity market is high, forex reserves will dwindle further.
And if that happens, other things like inflation will start looking uglier.
There might not be many immediate remedies. But fixing the capability to utilise more foreign aid is one way to increase reserves. Tapping more manpower market is also important to keep remittance flowing. And if one has to channel black money into the economy, let it be in the real sector directly or through bonds. That will help diversify exports and increase reserves in the long run.
Comments
Post a Comment