Bangladesh owes $2.5b but clear without delay BB Governor
Business Report:
Bangladesh has never defaulted on its foreign payment obligations and will not do so in the future, asserted Bangladesh Bank Governor Ahsan H Mansur.
Speaking at the Centre for Policy Dialogue’s (CPD) event “365 Days of the Interim Government” in Dhaka’s Gulshan on Sunday Mansur said the country had once accumulated $2.5 billion in dues but had committed to clearing them swiftly.
“Remittances provided strong support, exports performed well, and every bank was instructed to meet obligations – whether for S Alam, Beximco, or anyone else,” he noted. “Now, every foreign bank has restored Bangladesh’s previous status, and some have even expanded credit lines.”
Mansur recalled his early days in office when over 200 foreign banks had cut credit lines. “We told them to hold their decision until they saw improvement. Since then, the situation has turned around.”
Bangladesh Bank is moving ahead with major reforms to the country’s banking and financial sector, bypassing the idea of forming a bank commission to take immediate action, the central bank governor informed.
A key priority, he said, was stabilising the exchange rate to curb inflation. “We adopted a policy of not selling even a single dollar, and since 14 August last year, we have not sold one. We have never kept arrears and never will,” he emphasised.
He also mentioned applying “moral suasion” to currency traders, warning Dubai-based aggregators that Bangladesh would not buy dollars from them unless they adhered to the official rate of Tk122. “If they hold on to dollars, I don’t mind – they can’t keep them for more than a week,” he remarked.
While the financial sector has stabilised, Mansur acknowledged political uncertainty ahead of elections, noting that investors are waiting to see post-poll developments. Liquidity is returning, the stock market is projected to gain 1,000 points within a year, and the balance of payments is currently in surplus. Inflation has eased and could drop below 5percent by the fiscal year’s end.
The governor outlined major reforms, including amendments to the Bank Company Act 1991 to limit board directorships to six years, appoint at least six independent directors from an approved panel, and strengthen the Money Laundering Act with asset recovery provisions. A new Deposit Insurance Act is planned, enabling the central bank to act immediately against failing banks.
Other measures include risk-based supervision through 13 new departments, implementing IFRS 9 within two years, and restricting dividend payouts for undercapitalised banks. Bangladesh Bank is also expanding agent banking, promoting school banking (already 4.5 million accounts), supporting startups with a Tk1,500 crore fund, and pushing affordable housing finance – aiming to raise housing loans from 4percent of total lending to global norms.
Additional initiatives involve reducing smartphone and internet costs, enhancing service quality, and promoting QR-code-based transactions to cut the Tk20,000 crore annual cash handling cost.
“Stability has so far come in the financial sector, not the political one,” Mansur concluded, adding that security and investor confidence hinge on the outcome of upcoming elections.