The government will not devalue the Taka against the US dollar, said Finance Minister AHM Mustafa Kamal.
"We will provide incentives to numerous sectors if required. But we will not devalue the Taka anymore. Bangladesh is largely dependent on imports. Devaluation will hurt the economy," Kamal explained.
After a meeting of the Cabinet Committee on Government Purchase, the minister said this in reply to a query by the press.
The Bangladesh Bank has been devaluing the Taka against the US dollar since the last two years. Currently, the central bank is selling the dollar at a rate of 84.90 Taka. In November 2018, the rate was 83.90 Tk. In the last one year, Taka has been devalued by 100 basis points.
The finance minister said, "Everyone wants us to devalue the currency. Their point is that currency devaluation will push up export and remittance inflow. However, we countered saying the countries devalued their respective currencies got affected. We do not want this."
Kamal added that they will give incentives to boost up a sector. "We provided the ready-made garment sector with incentives and will give more if required.
"We have invested a huge sum of money in infrastructural development and are now hoping foreign investment in this sector. Currency devaluation will deter that investment," claimed Kamal.
The minister said the government has no plans to devalue the currency.
"There was no such plan and also will not be in the next budget," he added. Terming the bourses' downtrend move as a rumour, Kamal said, "Rumours come one after another and they last for days. The share market then bounces back. I do not know how long the current rumour will last."
Responding to another query, the minister commented, "Though the government mainly borrowed from national savings previously to meet the budget deficit, this year, it has opted for loans from the banking system.
"There is a rumour – the government is emptying the banks. Why will the government do that? We used to borrow from two sources while borrowing from the savings instruments was the main one," he went on.
Kamal said, "We could not bridge the gap between revenue collection and expenditure, forcing a budget deficit every year. Therefore, the government borrows. And if it does not borrow from the banks, from where will it get the money? The good news is our borrowings are lower than any other country."
Single digit lending rate from January 1
The finance minister said the banks will follow a single digit lending rate from January 1.
He said the central bank has submitted a report in this regard and will issue a circular soon.
"Single digit rate will remain the same in the manufacturing sector. This will be from January 1, and we hope the Bangladesh Bank will issue a circular in the meantime."
The minister informed that a committee was formed on December 1 to determine how the lending rate could be brought to single digit rate.
"Once implemented, the single digit rate will ease doing business," commented Kamal adding, "The move is to rescue the good borrowers from trouble. It is not for those who did not repay the money."