Rejaul Karim Byron

Finance Adviser Salehuddin Ahmed has vowed to mete out exemplary punishment to big loan defaulters as the interim government scrambles to fix the ailing banking sector of Bangladesh.

The Bangladesh Bank may increase the policy rate for both local and foreign currencies in a bid to reduce inflation and increase international reserves.

Bangladesh’s worsening economic crisis has spun off a price shock with food inflation crossing 14 percent in July for the first time in 13 years.

The priorities of newly appointed finance adviser Salehuddin Ahmed should be to make key financial institutions functional immediately, control inflation, and present accurate data on exports, imports, GDP and important economic indicators, economists said.

The amount of bad loans has been spiralling in Bangladesh owing to rampant politically-motivated lending and inadequate credit risk management, according to a World Bank report.

Total foreign debt servicing, including repayment of the principal amount as well as interest, rose to $3.35 billion in financial year 2023-24 from $2.67 billion in 2022-23.

Bangladesh is unlikely to fulfil the revenue collection target set by the International Monetary Fund (IMF) as part of its conditions for the fourth tranche of a $4.7 billion loan programme.

Bangladesh Telecommunications Company Limited (BTCL) has failed to realise dues worth around Tk 316 crore from different companies and falsely recorded it as “current asset” in its financial statement. 

Bangladesh Bank is going to unveil the monetary policy for the first half of fiscal year 2024-25 tomorrow and is expected to retain its tight monetary stance as its foremost target is to bring down the spiralling inflation.

The government’s borrowing through the sales of treasury bonds and bills jumped fivefold in the last fiscal year, which raised its debt servicing cost compared to the level projected initially.

The government has published rules stating where and how pension funds will be invested so that the National Pension Authority (NPA) can produce better returns at lower risks, a move that will ease its repayment burden.

The unit will work under the Finance Division

The government is going to amend the Bangladesh Bank Order, 1972 to align it with global best practices and give the central bank more autonomy so that it can initiate steps to help the economy deal with pressure.

The central bank discovered six types of statistical wrongdoing that inflated export data, a development that led to a multibillion-dollar correction.

For the sixth consecutive year, the finance division has imposed several restrictions on allocated budget expenditures, including foreign tours and block allocation, as a part of austerity measures amidst the ongoing economic crisis.

Bangladesh will seek fresh loans amounting to $20 billion during Prime Minister Sheikh Hasina’s upcoming visit to China, which Beijing hopes would be a “game changer” in the bilateral relationship.

The government aims to borrow more from the domestic sector at fixed rates and for longer periods and cut reliance on Treasury bills with a view to keeping debt risks lower and avoiding exchange rate volatility.

Talks on Chinese loan proposals will be at the fore during Prime Minister Sheikh Hasina’s upcoming visit to Beijing.

Bangladesh is going to fulfil the International Monetary Fund’s condition on foreign exchange reserves in June on the back of record budget assistance from global creditors, the first time since the IMF approved its $4.7 billion loan programme more than a year ago.

The International Monetary Fund has suggested an alternative to reducing agricultural subsidies -- raising fertiliser prices and providing cash or vouchers for certain farm inputs to support poor farmers.