New policies on cards for market-based lending, exchange rates

The Bangladesh Bank yesterday said it would roll out a set of policies to implement market-based interest rates and uniform exchange rates and disclose net and gross reserves in line with the conditions of the International Monetary Fund. 

"The policies might be implemented from July this year," Md Mezbaul Haque, the spokesperson of the central bank, told reporters.

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The upcoming monetary policy, which is usually unveiled by the Bangladesh Bank in July, will lay out a roadmap to this end, he said.

Haque made the disclosures at a press briefing at the central bank headquarters in Dhaka after meetings between the officials of the IMF and the BB.

The central bank has maintained a 9 per cent interest rate cap since April 2020 where there are multiple exchange rates. Local economists have long demanded scrapping of the lending rate ceiling and introduction of a uniform exchange rate to help the economy tackle the ongoing macroeconomic instability. 

"The central bank is going towards implementing a single exchange rate between the taka and the dollar.

All rates, such as export, import, and remittance will not be the same. The rates will be kept within a band of two per cent," said Haque.

Besides, the central bank will start publishing both net and gross foreign exchange reserves from July as well.

The IMF has set the conditions while sanctioning loans amounting to $4.7 billion to Bangladesh.

The multilateral lender has asked the central bank to calculate the reserves excluding the US dollar investments extended to exporters and others.

Haque was also asked about the unrealised export proceeds.

Some media outlets reported that the unrealised export proceeds stood at $3 billion. But the central bank official explained that they might have used the data from the Export Promotion Bureau (EPB) to reach the figure.

The central bank and the EPB calculate the forex reserve differently, Haque said.

"As per our calculation, the actual unrealised proceeds of exports now stand at $1.4 billion."

He shared five major categories linked to the unrealised export earnings.

The unrealised export takings from the short-shipment category are $255 million, $40 million from the bankruptcy of exporters, $20 million from the bankruptcy of importers, $125 million from the fake exports, and $251 million from litigations.

"The proceeds are awaiting repatriation. Some proceeds will be repatriated if the country wins litigations," Haque said.

An IMF staff mission came to the country on April 25 to monitor the implementation of the conditions and observe the macroeconomic progress of the country.

The team completed its visit yesterday after a series of meetings with various government agencies.