Vol. 5 Num 1137 Fri. August 10, 2007  

Mirza Aziz sees no quick respite from essentials' price hike
'Anti-corruption drive won't affect honest businesspeople'; 'BDR-run stores to help set up alternative marketing system'

Finance Adviser Mirza Azizul Islam does not see a quick respite from the soaring prices of essentials, but said the government is investing all its efforts to keep the market stable.

"Domestic demand is high as purchase capacity of people has increased, and at the same time we are witnessing high prices of commodities on the international market," Azizul said in an interview with The Daily Star on Sunday.

The adviser also talked about the government's anti-corruption drive, increasing inflation rate, Rupali Bank sell-off, plan to hike prices of gas, power and petroleum oil, and donors' conditional aid.

Asked about lack of confidence of traders in the move to curb graft, the adviser said the government is taking action only against the corrupt people. "The nation should decide what it wants… whether it will live with corruption or make a temporary sacrifice to eliminate or drastically reduce the corruption," he said.

The adviser however said there was lack of coordination at the initial stage. "But, now civil administration and the army are jointly working well."

"What we have tried to assure is that honest and genuine businessmen will not be affected," Azizul said.

"If you go through the track record of the people who have been arrested, I do believe that nobody will say these people's reputation was high."

Turning to the reasons for price hike, the adviser said there are lots of factors. "Per capita income rose by 11.1 percent in 2006-07 compared to that of FY 2005-06. Real income of people also increased by 6.7 percent during the period," he referred to the statistics, saying these are the indicators of purchase capacity.

Population has increased and many of the people are now above the poverty line, meaning their demands have increased as well, the adviser said, adding that these factors have contributed to price hike.

He said food prices have increased globally and this is a major reason for price hike of essentials as the country depends on global market for a number of food items.

"Once India was an exporter of wheat. But, now it has started importing wheat to meet domestic demand. The situation is same in Pakistan, which has imposed ban on export of wheat," he said.

The adviser was also critical of a section of economists who decried the government initiatives to stabilise the market by involving Bangladesh Rifles (BDR).

A number of leading economists recently slated the initiative of introducing alternative marketing system by BDR, saying such initiatives will not bring any positive results.

On the BDR efforts the adviser said, "We are trying to set up an alternative marketing system with the help of BDR. This is not to hamper the normal marketing system."

"If there is any monopoly or syndication of traders, such marketing system run by the BDR will force them [syndicates] to lower prices of commodities," he said. "People naturally will go to the places where they will get lower prices."


When asked about the overall economic situation, the adviser said, "I don't think that the overall picture is too bad. Import growth is over 15 percent and the growth of private sector's credit flow is more than 16 percent."

About the declining trend of credit flow since January, the adviser said, "I have asked officials concerned to analyse the matter on quarterly basis and we will get a picture after the analysis."


The adviser declined to give a categorical answer about the government plan to increase the prices of power, gas and petroleum products. "I can't give you an answer in 'yes or no' right now. We are examining the situation," he said.


About the International Monetary Fund's (IMF) latest proposal for fresh loans under the PRGF (Poverty Reduction Growth Facility) and the conditions the IMF has tagged with, the adviser said, " The IMF has some conditions for the loans and at the same time we will consider our benefits. Things will be discussed soon and it's a matter of mutual interest."

The adviser however said some of the recommendations by donors such as lowering loss of the SoEs should have done much before.

"This is not a viable matter that we will go with such huge losses of the SoEs for a long time," he said.

Asked about some economists' reservation on taking the IMF loan, the adviser said, "The economists have their own versions, but PRGF loan is not solely for balance of payment, it also serves other purposes."

"We will not be benefited by creating any clash with the IMF," he said.


About the Rupali Bank sell-off, the adviser said, "The ball is in their (Saudi prince) court. Saudi prince, the prospective buyer, is yet to withdraw his proposal and we expect immediate response."

"So far I know, the Saudi prince's representative, Sir Peters, is now in Dhaka and he met the Privatisation Commission chief. I am yet to be notified about the outcome of the talks," Azizul said.

"We are showing utmost patient. But it is also true that we will not give them unlimited time for such a big deal. We will have to settle the matter," he said.

Mirza Azizul Islam