Without using any funds from reserves, the Bangladesh Bank has repaid $1.5 billion in debt over the past two months. As a result, uncertainty is beginning to ease regarding the import of essential goods like fuel, gas, and fertilizer. The governor stated that after settling all debts by December, the economy will return to a more positive trajectory. He advised patience, suggesting that thoughts of investment and growth should be set aside for now.
Nearly all petroleum products, including fuel oil, gas, and coal, are imported from various sources, costing about $9 billion in the last fiscal year. Additionally, reliance on electricity and fertilisers is increasing daily. However, due to a dollar crisis over the past two years, these payments could not be made on time.
In this context, debts to several foreign companies supplying Adani, KAFCO, Chevron, and BPC accumulated to over $2.25 billion. Nevertheless, the central bank has repaid $1.5 billion of that debt without touching reserves in the last two months. The governor expects the remaining amount to be settled within two months.
Bangladesh Bank Governor Dr. Ahsan H. Mansur mentioned that the government had around $2.5 billion in unpaid debts in dollars, which has now been reduced to $700 million. Substantial payments have been made for fertilisers, electricity, and to Adani and Chevron, effectively reducing outstanding debts. The goal is to bring the debts down to zero in the next two months, which will increase liquidity in the market.
After settling these debts, pressure on financial management will ease, accelerating overall activity. At the same time, preparations are underway to secure nearly $10 billion in loans from various agencies. However, the governor expressed some concern over the increasing pressure from the current $103 billion in foreign debt and repayments. He noted that managing the situation will require patience for at least a year.
The governor further stated that if he receives an additional $2-3 billion from the IMF, along with another $2 billion from the World Bank, then this $5 billion could be used for two purposes. The government could increase some spending, which would help stimulate economic activity. He cautioned that immediate extravagant spending would not resolve the current lack of investment, acknowledging that investment levels will likely remain low for now. The World Bank indicates that our growth may drop to around 4%. He agrees, believing it could be between 4-5%, but this will only be for one year.
During this time, the governor also raised concerns about the potential decline in exports due to labour unrest.
Source: Channel 24
