Wednesday, April 20, 2005

IMF are back to their old tricks again

Interest rates are on their way up. The banks are being squeezed by the central bank, Bangladesh Bank, on the "advice" of the IMF. Big business is up in arms, showing remarkable unity. They have criticised the IMF for deficient analysis and misunderstanding the nature of inflation in this country. In their view, extortion, supply shocks, rise in administered prices of fuel and electricity, depreciation of the Taka cause inflation.
Unfortunately, the IMF is merely relaying the global message from the world's financial markets that interest rates have to go up to curb the enormous asset bubble in the US and Europe.
Things have got out of hand as real estate prices are at ludicrously high levels.
We fully understand that compulsion. But that has very little to with Bangladesh where interest rates are at 12 to 15%, not 3%!
It is the case of the old IMF philosophy once again: One size fits all.
On top of all the political problems, do we need economic destabilisation too? 2006 does not look too good.

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