United News of Bangladesh

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.

Dr. Ahsan H. Mansur, newly appointed governor of Bangladesh Bank, has said his priority will be to check the high inflation and restore stability in the financial sector.  Expressing satisfaction over his new responsibility Dr. Mansur told UNB on Tuesday night that he will work with all stakeholders in the financial sector to bring back stability and put it on a solid foundation. On Tuesday night the interim government's law ministry hurriedly waved the age limit of 67 years for anyone to be appointed as governor of the central bank. Economist Mansur is now 72 years old. The last time the age limit provision got amended from 65 years to 67 years was in July 2020 to accommodate the reappointment of then-governor Fazle Rabbi.  Read more: Money launderers won’t be allowed to sleep in peace: New Bangladesh Bank Governor He believed that despite high inflation - it hit 11.66 in July in a 13-year high- the central bank under the previous administration did not give full attention to curb it.  Controlling inflation remains a top priority for any central bank.  However, money supply, exchange rate stability, and inflation control all depend on the decision of the governor. Besides, the standard of living, international trade, investment, and employment depend a lot on the decisions of the central bank of any country, he said. Dr. Mansur started his career as a lecturer, at the Department of Economics, Dhaka University in 1976. He left for Canada for higher studies in economics the same year. As a graduate student and research assistant, he was also offering regular economics courses at the undergraduate level at the University of Western Ontario, Canada (1978-81).  Dr. Mansur joined the International Monetary Fund under its Economist Program in 1981 and thereafter completed his PhD in Economics (on general equilibrium analysis) from the University of Western Ontario in 1982. During his long career at the IMF, he worked in Middle Eastern, Asian, African, and Central American countries. He worked in important functional departments (Fiscal Affairs and Policy Review and Development departments) and area departments (Middle East and Central Asia and Asian departments) of the IMF. Read more: Inflation hits 13-year high of 11.7% in July: BBS He also served as the IMF Senior Resident Representative to Pakistan from 1998-01 and as the Fiscal Advisor to the Minister of Finance, Government of Bangladesh (1989-91).

The government’s successful negotiation of a $4.7 billion, approved at the Executive Council of the International Monetary Fund (IMF), will raise confidence in the macroeconomy amid a volatile foreign exchange market, analysts said. They said that the IMF loan program can help bring stability to the macroeconomic situation in two ways- increasing the US dollar supply and igniting a process of reform in the financial sector. Economist and adviser to the last caretaker government Dr ABM Mirza Azizul Islam told UNB that the IMF loan works as a standard for the economic strength of a country. Other international financial organisations would be encouraged to provide loans and in other financial dealings with Bangladesh now. He said that the loan will contribute to a stable exchange rate by strengthening the foreign exchange reserve for the short term. Besides, the IMF loan will work as a remedy while inward remittance flow and repatriation of export income have slightly decreased, Mirza Aziz said. The government will be implementing reforms in the financial sector as per the advice of the IMF, which will bring good results in the long run for the macroeconomy, he pointed out. Read more: $4.5 billion loan: IMF reaches preliminary agreement with Bangladesh Many countries are seeking IMF’s loan support to face the foreign exchange crisis due to the fall of global economic growth. Bangladesh’s process for securing the loan has been much smoother than some other countries, which is a good endorsement of Bangladesh’s macroeconomic stability. Economist and former Governor of Bangladesh Bank (BB) Dr Atiur Rahman told UNB that the IMF board decision indicates strong confidence in Bangladesh's macroeconomic management and willingness to undertake necessary reforms for inclusive and sustainable growth. Besides budget support, the approval of a new loan of $1.4 billion from the Resilience and Sustainable Fund (RSF) also demonstrates the IMF's recognition of Bangladesh's capacity to address climate change challenges, he said. “The loan, of course, is focused on addressing high inflation and falling foreign exchange reserves. Indeed, Bangladesh, though not in the same club as Sri Lanka and Pakistan, has still made this pre-emptive move of asking for long term low-cost funding support from the IMF, to avoid future pressures on its macroeconomic indicators that have already been affected to some extent by the ongoing global economic crisis,” he added. Dr Atiur said the state-of-the-art technical knowledge of IMF experts in Bangladesh will certainly benefit from this program in undertaking necessary reforms in the financial sector for raising revenue and foreign exchange reserve, improving governance of the banking sector to reduce non-performing assets, and targeting better social protection for the extreme poor. These reforms are, however, already in place as a part of the indigenous development strategy of Bangladesh. The program will only further consolidate their implementation process, he said. Read more: Bangladesh receives 1st instalment of IMF’s $4.7 billion loan: BB spokesperson "Other development partners like the World Bank, ADB, and JICA will be encouraged to come forward with additional support for infrastructural development in Bangladesh. FDI will also flow at a faster pace to take advantage of the conducive investment environment in Bangladesh which will be further strengthened by the presence of the IMF program," said Dr Atiur, also a professor of economics at Dhaka University. The IMF said that the loan will help stabilise Bangladesh's macroeconomy, implement the necessary reforms to build capacity for social and development spending, strengthen the financial sector, modernise policy frameworks, and address climate change.  

With the increasing number of mobile financial service (MFS) accounts and the amount of unused money or deposits, the stature of e-money is constantly growing in Bangladesh. The Bangladesh Bank (BB) sees this rapid growth of e-money as abnormal. The central bank is also concerned about the proper use of funds deposited with MFS service providers. The experts fear that many people in the country will be affected if a large MFS service provider crashes. There is also a fear of losing discipline in the financial sector. At the end of June 2021, the number of registered customers of MFS companies stood at 9.97 crore. But half the accounts of this huge customer base are not active. In June the number of active account holders was 4.09 crore.  Read: Meeting between FID, BB, BSEC fails to settle issues on share market investment At the end of June, the combined balance sheet of all MFS accounts held Tk 9,200 crore. About 85 percent of the amount is under the control of the largest player, bKash, which enjoys close to 50% market share. At present, the number of registered customers of bKash is more than 5 crore. Coronavirus has pushed people's reliance on MFS providers such as bKash, Rocket and Nagad. As a result, the number of customers in mobile banking is increasing in the pandemic period. At the same time, the amount of transactions is also increasing. Mobile banking is now an easy and popular service in the country due to the convenience of instant transactions. Read IDLC introduces Bangladesh's 1st MFS-based digital savings programme However, the former governor of Bangladesh Bank Dr. Salehuddin Ahmed said that it is not right to have so much money tied up in MFS. He told UNB that MFS companies are never like banks. These institutions are only being used as a means of transferring and paying customers. Depositing so much money at MFS is against financial norms. Dr. Salehuddin said the central bank does not have direct control over MFS institutions. Read 'MFS shown to ensure transparency in govt's welfare distribution' “Unclaimed deposits in the bank have to be deposited in the central bank. It is unknown at this time what will be unclaimed deposits in the MFS. It will be the responsibility of Bangladesh Bank to look after the portfolio of MFS,” he added.