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BB underlines buffer food stocks PDF Print E-mail
Friday, 28 March 2008

Staff Correspondent

The central bank governor Thursday advised the government to build up its emergency food stocks to ensure unforeseen food shortfalls in the future do not catch it off guard.

"Some are saying that we're holding back our forex reserves (foreign exchange reserves), which is not true at all," the chief of Bangladesh Bank, Salehuddin Ahmed, told reporters after a meeting with the chief executives of private banks.

"I am releasing much of the hard-earned foreign currency to pay for essential imports such as food grains." "I would be the happiest person alive if food reserves swelled in place of forex reserves," said Salehuddin.

The BB chief said he hoped a bumper boro harvest would go some way to mitigating the food crisis, which had been partly caused by last year's flooding and devastating cyclone. "However, the government has to build up adequate food stocks to handle any possible food shortage after the boro harvest," he said.

The central bank governor said work on building up national food stocks had to start immediately, as many other countries, including neighbouring nations, had already started the process to meet global shortages.

On a cautious note of optimism, Salehuddin said one of the most alarming financial indicators, the inflation rate, had started to drop. "In February it came down to 10.16 percent from 11.43 in January and 11.59 in December."

The BB chief, however, said the price inflation rate was not a good indicator of consumer prices as it also dealt with the supply of commodities. Salehuddin said the national economy had gathered pace recently with "both export earnings and investments on the rise".

"Imports of capital machinery have also increased everyday since February. All other financial indicators are also gradually turning positive," he said.

According to the latest central bank bulletin, food stocks at the end of January stood at 668,000 tonnes, compared with 717,000 tonnes a year ago. BB data shows the central bank's forex reserve stood at $5.44 billion Thursday, while the figure in early March was over $6.00 billion, which broke all records. The reserve came down to $5.34 billion on March 9 after payments of January-February import bills.

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