What is going on with our economy? Current account dwindling each year. BOP showing signs of unsustainability. Both international and domestic reserves almost touching the minimum threshold. RMA running out of monetary instruments. There is not much the Central Bank can do under the current Fix Exchange Regime. Monetary Policy will not be so effective. Constitutional requirement of minimum reserves enough to cover 12 months on one side and liquidity problem on the rise in the market on the other hand. Sad thing is, as a tiny economy with poor competitiveness, low productivity, high transaction costs, and logistical issues, the capacity of improving current account is doubtful. Unpegging the currency will be digging our own grave. Devaluating may not be a good solution as our export is too narrow to benefit. The damage would be much more greater than the gain. Saddest path is, politicians are busy campaigning with all kinds of unreasonable promises instead of coming with a good plan to solve pressing economic downturn before it is too late.
Posted on: Sat, 22 Jun 2013 01:46:50 +0000
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