Bangladesh Bank Governor Dr. Ahsan H. Mansur said the next government should continue the reforms process in the banking sector, and continue the interim government's initiatives to try and bring back laundered money.
Regarding bringing back the laundered money, the governor said, “No country has been able to bring back the laundered money in less than five years. We are trying. If this government is not able to do so, the next government should take this program forward consistently.”
Macro economy shows stability, says Bangladesh Bank Governor
He said this while speaking as the chief guest at a seminar on ‘Macroeconomic Landscape: Challenges in the Banking Sector and the Path Ahead' held at the Economic Reporters Forum (ERF) auditorium in Paltan Tower, Dhaka on Thursday.
The special guests at the seminar organized by ERF were Professor Dr. Mostafizur Rahman, Honorary Fellow of the Center for Policy Dialogue (CPD), and Mohammad Ali, Managing Director of Pubali Bank.
The governor said there are many challenges in the economy. However, there is no reason to worry about foreign exchange and reserves, he added. The decline in reserves has been stopped to some extent. Not a single penny has come from the IMF. But remittances have increased by 24 percent. This month, it will cross 30 percent.
In this fiscal year, remittances will cross $30 billion. The main reason for this is that money laundering has been prevented, he said.
Dr. Mansur also said, no dollars are being sold from Bangladesh Bank now. There is almost no difference in the dollar rate in the bank and the curb market.
Claiming that the remittance rate is not being manipulated, the governor said, a group in Dubai tried to manipulate the dollar. But the central bank was not affected by it.
He also said, private sector credit growth has decreased due to the decline in deposit growth. It is not because of the increase in policy rates. Government debt has decreased from 12 percent to 9 percent. Now banks will have to lend to the private sector.
“The days of lending to government and making profits are coming to an end. Banks have to make profits by lending,” he pointed out.
Bangladesh poised for record remittance inflow this year: Governor
The Governor talked about reforming the banking sector, especially Bangladesh Bank.
He said, if a single family takes 87 percent of a bank's money, it takes time for that bank to stand. Despite all this, Islamic banks have turned around. They have started giving loans. This happened mainly due to gaining the trust of depositors.
Regarding inflation, the Governor said, inflation did not happen in a day. It takes at least 18 months to implement it after tightening the policy. In our case, it has been six to seven months. It will take at least another five months to see a good effect. We have still kept the monetary policy in a contractionary position.
The Governor said that the central bank has taken many steps to reform the banking sector in Bangladesh after August 5. He said the exchange rate of foreign currencies is now much more stable. The real effective exchange rate is also good. The remittance flow is also good.
Regarding the changing the narrative of LDC graduation, the governor said, “No country in our group is now in the LDC category. Bangladesh has achieved the capacity to go to LDC in 2021. But under the pressure of our country's industrial sector, we extended the LDC transition time to 2026.”
“There are many good aspects of graduation. There is no honor in being poor. Why can't we become a middle-income country? We are a middle-income country. Why should we remain a low-income country for tariff benefits,” he kept question.
ERF President Daulat Akhtar Mala delivered the welcome speech at the seminar. The program was moderated by ERF's Joint Secretary Manik Muntasir.