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South Asia not ready for common currency

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Governor of the Central Bank of Sri Lanka, Dr P Nadalal Weerasinghe participating in a panel discussion at the 14th South Asian Economic Summit on Saturday

(Daily Star/ANN) South Asia is not yet ready for a common currency, said economists from countries in the region at the opening of a two-day 14th South Asia Economic Summit in Sheraton Dhaka on Saturday.

However, integration in trade and investment, increased mobility and people-to-people connectivity will provide the incentive for monetary cooperation in the region, they told a session on macroeconomic cooperation and the possibility of a common currency.

South Asia accounts for nearly one fourth of the global population and it has the market and ability to grow together, said the economists at the event being hosted by the Centre for Policy Dialogue.

Yet it is the least integrated in terms of trade, said Zahid Hussain, former lead economist at The World Bank, Bangladesh.Intra-regional trade accounts for 5 percent of South Asia’s total trade whereas the share of intra-regional trade in the Association of Southeast Asian Nations (Asean) region is 25 percent, he said.

South Asia is diverse in land area, gross domestic product or economic output, and population but the region’s countries have similar levels of human and economic development which calls for increased integration, he said.However, there is a lot of barriers to mobility, he said, citing non-tariff barriers, complicated visa policies and rigid bureaucracies.

“There is high sensitivity to national sovereignty. National currencies evoke strong attachment and emotion,” said Hussain at the event.

Political will to give up fiscal and monetary autonomy is also necessarily to go for a common currency, he said.

Complementarity in trade and free flow of labour and capital among the members can make cooperation over a currency more likely, he said.

Several countries have taken steps to reduce dependence on the US dollar and Bangladesh also took bilateral initiatives to settle trade in Chinese yuan and Indian rupee in 2022 and 2023, said Hussain.

However, the response with regard to trade in rupee is muted while exporters in China prefer receiving payments in dollars, euro and pound sterling, he said.There is persistent and growing trade deficit among Bangladesh, China and India, which makes trade in rupee and yuan limited here, he said.

Bangladesh’s average monthly trade deficit is $1.13 billion with China and $644 million with India.Comparability of economies is needed for a common currency, said Md Habibur Rahman, chief economist at Bangladesh Bank. “We are not right there…We can search for an appropriate time and opportunity for this,” he said.

A mechanism enabling independence is needed to avoid sanctions, said Abid Qaiyum Suleri, executive director at Sustainable Development Policy Institute, Pakistan.

Pakistan is relying on barter trade with countries such as Afghanistan, China and Russia, he said.

“Instead of losing hope on a common currency, we can explore so that we reduce dollar dependence,” said Suleri.

Posh Raj Pandey, senior economic advisor of the finance ministry of Nepal, proposed for establishing a regional financial market in this regard.

Use of the US dollar for international transaction settlement is declining, said Professor Sachin Chaturvedi, director general of the Research and Information System for Developing Countries, India.

International transactions other than that of the US dollar accounted for 9 percent of total global trade in July 2022 and it rose to 14 percent in December the same year, he added.

“This is an indication of rising arrangement of settlement in non-dollar,” he said, adding that 38 countries have shown interest to trade with India in rupee.

However, to make trade in the rupee popular between Bangladesh and India, a large line of credit in rupee is needed, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.

“Otherwise, the performance we have seen is dismal…We also should think of currency swap to protect against external shock,” he said.

Countries should start with trade facilitation for economic integration and go for common documentation for customs, encourage firms to invest regionally and foster people to people connectivity, said Mansur.

Visa issuance and border control is quite pervasive and old fashioned, he said.

The economist also suggested harmonisation of tax and trade policies among members of the South Asian Association for Regional Cooperation.

“We also need monetary policy harmonisation. We need to think about bringing inflation close to each other and currency stability. Cooperation at the institutional level is critical,” he said.



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A mechanism that goes beyond the normal state apparatus is needed to restore public life – President

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President Anura Kumara Dissanayake emphasised that a unified operational mechanism, which goes beyond the normal state administration, is required to restore public life after a disaster.

The President stated this while participating in the Kandy District Coordinating Committee meeting held at the Kandy District Secretariat on Saturday  (06).morning

During the meeting, the President separately reviewed the progress of the programmes underway to restore essential infrastructure in the district, including the roadways, electricity, water and fuel supply, irrigation systems and communication facilities.

The President instructed officials to utilise the allocated provisions for the next 25 days to complete road clearing activities swiftly, until the permanent reconstruction of roads is completed.

The President also instructed that water supply in the district be fully restored within three days. Until then, the water requirements of the public should be met through bowsers and such activities must be carried out as an emergency measure beyond the usual procedure, with technical support from the Tri-Forces.

Further, he instructed that the cleaning of household wells be carried out under the coordination of Divisional Secretariats and that electricity supply in the district be restored by 31 December through temporary repairs, while major reconstruction work will be carried into the second phase.

The President pointed out the need to identify arable lands and give priority to cultivation. He instructed that cultivable paddy fields be identified urgently and supplied with the required irrigation water and highlighted the importance of coordinated action by the Department of Irrigation, Provincial Irrigation Department and the Department of Agrarian Development.

He also instructed officials to expedite the payment of the Rs. 200,000 compensation allocated to identified farmers and fields and to submit a report on the extent of vegetable cultivation affected in the district within two weeks. Accordingly, Rs. 150,000 per hectare will be paid as compensation to the affected vegetable farmers and necessary amendments will be made to provide the same compensation for losses incurred in banana cultivation.

The impact on the livestock sector due to the disaster was also broadly discussed. The President highlighted the need to maintain updated data regarding the number of farms and livestock.

He explained the need to restart damaged livestock farms swiftly, to restore income sources for the farmers and to meet the country’s food needs, including milk, poultry and eggs.

Discussions were also held regarding restoring fuel supply in the district. Due to road blockage, fuel supply has been disrupted in Pussellawa and Meetalawa. The President instructed that, through coordination between the Road Development Authority, the Tri-Forces and the Police, fuel be supplied to these areas by Saturday [06] evening.

The resumption of schools in the Kandy District was also discussed. The President instructed officials to minimise delays in reopening schools to ensure that examinations are held as scheduled.

The President also examined in detail the steps taken to restore the district’s health services, railways and communication facilities.

Discussions were held regarding housing damage and the resettlement of affected people. The roles of the Geological Survey and Mines Bureau and the required staffing needs were considered.

The President stated that state-owned lands in adjacent areas will be identified and presented for resettlement activities and necessary interventions will be made to release such lands through discussions with relevant institutions.  He emphasised that the government’s objective is to resettle people safely and continuous assessment must be carried out to ensure that compensation provided for destroyed and partly damaged houses is used properly for reconstruction.

As all compensation payments will be made under the 2025 Budget, the President stressed the need to complete all payments before 31 December, to avoid a burden on the 2026 Budget. He said the dedication of all state officials is essential to successfully implement the programmes initiated to restore public life.

Attention was drawn to the garbage disposal problem in Gampola. As a long-term solution, the President instructed that, until the relevant Mahaweli land is released, land belonging to the Ceylon Electricity Board be temporarily allocated for the purpose.

Attention was also paid to the damage caused to state institutions due to the disaster situation.

While noting that natural disasters such as floods, storms and landslides cannot be prevented, the President emphasised that the loss of lives and property can be minimised. He stated that a proper study of the Central Highlands is needed and a long-term plan must be prepared to restore the eroding ecological system.

He further highlighted the need to enforce the powers of local authorities to prevent similar disasters in the future, stating that no room should be given for illegal constructions hereafter. He also noted that Ceylon Electricity Board should not provide electricity to such unauthorised locations.

The President stated that although some expected it would take a long time for the country to recover after the disaster, the government has already been able to restore public life to normalcy within a very short period. He added that by working together for a little longer, the desired goals can be achieved.

The President expressed special appreciation for the dedication shown by state officials and the Tri-Forces in carrying out these tasks.

Minister of Agriculture, Livestock, Land and Irrigation K.D. Lal Kantha, Deputy Minister of Transport and Highways Prasanna Gunasena, Deputy Minister of Health Hansaka Wijemuni, Members of Parliament Jagath Manuwarana and Thanura Dissanayake, as well as Central Province Governor Professor Sarath Abeykoon, Chief Secretary G.H.M.A. Premasinha, Kandy District Secretary Indika Udawatta and officials representing all line agencies including the Road Development Authority, Ceylon Electricity Board and the Irrigation Department attended the occasion.

 

 

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President calls on the Mahanayake Thera of the Asgiri chapter

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President Anura Kumara Dissanayake on Saturday (06) morning  visited the Asgiri Maha Viharaya and paid respects to the Mahanayake Thera of the Asgiri Chapter, Most Venerable Warakagoda Sri Gnanarathana Thera, from whom he received blessings.

The President briefed the Mahanayake Thera on the government’s programmes to provide relief to the people affected by the prevailing disaster situation and engaged in a brief discussion with him.

Thereafter, the President called on the Anunayake Thera of the Asgiri Chapter, Most Venerable Narampanawae Ananda Anunayake Thera and also held a brief discussion with him.

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President calls on the Mahanayake Thera of the Malwathu chapter

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President Anura Kumara Dissanayake on Saturday (06)  morning  visited the Malwathu Maha Viharaya and paid respects to the Mahanayake Thera of the Malwathu Chapter, Most Venerable Thibbatuwawe Sri Sumangala Thera.

The President briefed the Mahanayake Thera on the government’s programmes to provide relief to the people affected by the prevailing disaster situation and engaged in a brief discussion.

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