Rejaul Karim Byron

Bangladesh could get $3 billion in budgetary support under an Asian Development Bank (ADB) and World Bank (WB) arrangement for energy and power sector reforms and the upcoming status graduation from a least developed country (LDC) to a developing nation in 2026.

Bangladesh aims to increase its merchandise and service exports by about 12.74 percent year-on-year to $57.5 billion in the fiscal year 2024-25, according to Finance and Commerce Adviser Salehuddin Ahmed.

The interim government is planning to revise the national budget for the current fiscal year urgently and cut “wasteful expenditures” in order to alleviate the pressure on the foreign currency reserves and tame persistent inflation.

The government is seeking as much as $8 billion in budget support by December from the development partners, including the International Monetary Fund (IMF), to pay back foreign liabilities and boost foreign exchange reserves.

Although the authorities took steps to eliminate mismatches in export data in recent months, discrepancies in the data of revenue collection and expenditure among government agencies continue to persist.

As foreign aid in the pipeline reached nearly $46 billion at the start of this fiscal year, the interim government will take initiatives to utilise those funds to bolster the country’s foreign currency reserves.

Bangladesh is facing several challenges, including restoring law and order and stabilising the economy in the near term.

Interest payments against foreign loans shot up 162 percent year-on-year in the first nine months of the last fiscal year as debt servicing of loans taken for some mega projects has started.

When Sheikh Hasina returned to power in 2008, Bangladesh’s total debt was just $33.66 billion. When she fled amid an unprecedented student-led uprising on August 5, she left behind a burden of $156 billion in local and foreign loans for the country to carry.

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.