‘Even IMF won’t help if reserves fall below $10b’
Staff Reporter :
The International Monetary Fund (IMF) will not help Bangladesh if the county’s foreign exchange reserves continue to decline and goes below the $10 billion-mark, said the Centre for Policy Dialogue (CPD) Chairman Prof Rehman Sobhan.
He, however, said that Bangladesh’s economic situation is still better than that of Sri Lanka considering the higher remittance and export earnings.
The economist came up with the remarks while speaking at a view exchange meeting organized by the Economic Reporters Forum (ERF) at its office in the capital on Monday.
Recommending imposing import restrictions considering the priority of products, Prof Sobhan said that he could never think that Bangladesh’s forex reserves would fall below $30 billion, whereas the amount is now hovering below $20 billion.
“We have a large export sector. Along with that, there is remittance or expatriate income, which is much higher than Sri Lanka,” he said, adding that is why he does not believe that the overall economic situation of Bangladesh can ever be like that of Sri Lanka.
Inward remittances dropped to $1.34 billion in September, the lowest in 41 months, according to the Bangladesh Bank data, though August saw the highest number of workers going abroad in a single month and a record 11.3 lakh in FY23.
Bangladesh’s foreign exchange reserves continue to slide and stood at $21.15 billion on September 26 in line with the IMF reserve calculation method, according to central bank data.
In this regard, noting that remittance inflow in the country has been declining, he said, “But that does not mean that expatriate income has actually decreased.
Instead of coming through formal channels, expatriate income is coming through informal channels – the main medium being hundi.
“Instead of being deposited in the Bangladesh Bank, reserves are being deposited in hundi, therefore, outside the country.
So, it has become quite convenient for those who smuggle money abroad,” the economist added.
Mentioning that there has been a big change in the culture of the country’s financial sector, Prof Sobhan said, “Non-repayment after borrowing has become the norm.
It is not done by large businesses. Rather, those who are involved in such events introduce themselves as big politicians.”
“Representatives of the World Bank, the IMF – who are now coming to Dhaka and asking to reduce defaulted loans, their fathers and grandfathers have also come here and said the same things. But loan defaults are not declining,” he added.
He further said that the loan defaults have become the new normal and the defaulters have become powerful figures within the government.
