Rejaul Karim Byron

Bangladesh’s interest payments on external borrowing are projected to soar by 65 percent within three years due to rising global interest rates and an expanded foreign loan portfolio, which will put further pressure on the dwindling foreign currency reserves. 

The International Monetary Fund (IMF) has suggested greater exchange rate flexibility to preserve reserve adequacy, warning failure to do so may create further imbalances in the currency market.

The government gave its commitment to the International Monetary Fund regarding around 50 issues to restore macroeconomic stability and good governance in the financial sector.

Bangladesh will have to comply with 33 new conditions by June next year in order to receive the next two instalments under the International Monetary Fund’s $4.7 billion loan programme.

The International Monetary Fund yesterday approved the third tranche of $1.15 billion loans in a boost to Bangladesh’s foreign exchange reserves.

On the back of the credits from the World Bank and the International Monetary Fund, Bangladesh may meet for the first time the condition on net foreign exchange reserves attached to the $4.7 billion loan from the IMF and secure the next instalment.

It declined 68% year-on-year to 17.71 million Swiss francs in 2023

Bangladeshi nationals and banks kept 17.71 million Swiss francs (CHF) in deposits last year in the banks of Switzerland, the lowest on record, reflecting the fading attractiveness of the country among the wealthy to park money.

India may offer Bangladesh fresh loans under a new framework, as implementation of the projects under the existing loan programme is proving difficult due to some strict loan conditions.

The International Monetary Fund will discuss releasing $1.15 billion in the third instalment of its loan to Bangladesh during its board meeting on June 24. This is part of the IMF’s $4.7 billion loan programme for the country.

Bangladesh’s foreign currency reserves are set to receive as high as $2 billion this month, which may send the total to nearly $21 billion, handing a much-needed relief to the US dollar supply.

The private sector’s short-term foreign debt in Bangladesh made a turnaround for the first time in more than a year in April, handing a much-needed fillip to the foreign currency reserves.`

Bangladesh has agreed to buy 40 megawatts of electricity from Nepal at Tk 8.17 per unit, including transmission cost, under a five-year agreement.

The revised gross forex reserves target for the current fiscal year ending on June 30 was $29.1 billion. It stood at $24.23 billion on June 5, according to the traditional calculation of the Bangladesh Bank. To meet the goal, another $4.87 billion will have to be added to the reserves by this month.

More than a third of the subsidies allocated in the new budget is for the power sector due to what experts say is the huge spending on capacity charges.

Finance Minister Abul Hassan Mahmood Ali yesterday expressed hope that the government would be able to curb high inflation on the back of budgetary measures and the central bank’s steps.

The government will rely more on domestic bank borrowing than foreign financing in the next fiscal year, intensifying pressure on the economy.

With an aim to restore macroeconomic stability, reduce inflation, and contain pressure on foreign currency reserves, Finance Minister Abul Hassan Mahmood Ali is going to place a Tk 7,96,900 crore budget for the 2024-25 fiscal year tomorrow.

The overall revenue generation target will be Tk 537,000 crore in the new fiscal year that begins on July 1, which is 7.4 percent higher than that of the goal of the outgoing financial year.

The subsidies and incentive expenditures in the upcoming budget are going to be more than that of the current fiscal year.