After the fall of the Awami League government, measures were taken to prevent money laundering and reduce corruption, leading to an increase in the supply of dollars in the interbank market. While there is still a liquidity crisis in the local currency, there is no longer a shortage of dollars. Consequently, without tapping into reserves, Bangladesh Bank has paid off $1.5 billion owed to foreign institutions over the past two months using dollars from the interbank market.
Bangladesh Bank Governor Dr. Ahsan H. Mansur stated that while there was previously a dollar shortage in banks, most banks now have increased dollar reserves. He explained that even though there is a local currency shortage, there is currently no dollar crisis in banks, as expatriates primarily send dollars back home as remittances, and export earnings are deposited in banks.
He further clarified that the central bank buys dollars from commercial banks and sells them as needed but is not selling any dollars from reserves. The governor elaborated that due to a significant influx of remittances, some banks have surplus dollars but lack the local currency. They were instructed to use the surplus dollars to settle debts owed for fertilizers.
In the previous governor’s term, due to a dollar crisis, several foreign companies, including Adani, KAFCO, Chevron, and BPC, had accumulated over $2.5 billion in unpaid dues. However, in the last two months, the Bangladesh Bank has managed to settle $1.5 billion without drawing from reserves. The remaining $700 million is expected to be paid off soon without tapping into reserves.
Dr. Mansur stated that the economic outlook would improve by December, advising patience rather than focusing on immediate investments or growth. The majority of petroleum products are imported, costing nearly $9 billion in the last fiscal year, while dependence on electricity and fertilizers is also increasing. The central bank has reduced the outstanding debt to $700 million, with plans to eliminate it in the next two months to improve liquidity in the market.
After clearing these dues, the financial management pressure will ease, enhancing overall activities. Preparations are underway to secure an additional $10 billion in loans from various agencies. If the country can secure $2-3 billion extra from the IMF along with $2 billion from the World Bank, economic activities will gain momentum.
Source: Ittefaq
