Country accumulated $2.5b dues but committed to clear it without delay: BB gov
"We adopted a policy of not selling even a single dollar, and since 14 August last year, we have not sold one," the governor said
Highlights
- Bangladesh has never defaulted on foreign payments, says BB governor
- Country accumulated $2.5b dues, committed to clear soon
- "War" declared on Dubai-based dollar aggregators over rate compliance
- Major banking sector reforms underway, including director term limits
- Political uncertainty remains ahead of elections despite financial stability
Bangladesh has never defaulted on its foreign payment obligations and will not do so in the future, said Bangladesh Bank Governor Ahsan H Mansur, adding that the country had accumulated $2.5 billion in dues but made commitments to settle them as quickly as possible.
"Remittances provided tremendous support, exports performed well, and every bank was instructed to meet obligations, whether they belonged to S Alam, Beximco, or anyone else," Mansur said.
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"Now, every foreign bank has restored Bangladesh's previous status, and some have even increased their lines of credit."
Speaking at the Centre for Policy Dialogue (CPD) event "365 Days of the Interim Government" in Dhaka's Gulshan today (10 August), Mansur highlighted that stabilising the exchange rate was key to bringing down inflation.
"We adopted a policy of not selling even a single dollar, and since 14 August last year, we have not sold one," he said.
"We have never kept arrears and never will. At one point, $2.5 billion in arrears had accumulated, but we committed to clearing them as soon as possible," he added.
The governor recalled his first meeting with international bankers after taking office, when over 200 foreign banks had cut credit lines.
"We told them, stop right there. If we fail to improve, then you may act. Since then, the situation has turned around."
He said moral suasion was initially applied, including declaring a "war" on Dubai-based aggregators, warning that no dollars would be bought from them unless they sold at the official rate of Tk122.
"If they hold on to dollars, I don't mind, they can't keep them for more than 5–7 days," he added.
While stability has been achieved in the financial sector, political uncertainty remains ahead of the elections, which investors will closely watch. Liquidity is returning to the market, with the stock market expected to gain 1,000 points in a year. This year's balance of payments is in surplus, inflation has eased and could fall below 5% by the fiscal year's end.
Reforms Underway
Mansur detailed reforms underway in the banking sector, including amendments to the Bank Company Act 1991 to limit board directorships to six years instead of 24, the appointment of at least six independent directors from an approved panel, and fundamental changes to the Money Laundering Act with asset recovery provisions.
Other planned measures include a new Deposit Insurance Act, empowering the central bank to act immediately against non-performing banks regardless of ownership, and significant changes to the Money Loan Court Act to prevent prolonged injunctions.
He also outlined steps for broader financial inclusion, such as expanding agent banking, promoting school banking accounts, supporting startups with a Tk1,500 crore fund, and pushing for affordable housing finance.
Bangladesh Bank is pushing affordable housing finance, aiming to raise housing loans from the current 4% to global averages, and working with RAJUK to increase allowable building heights for projects on mortgaged land.
Measures are also being taken to lower smartphone and internet costs, improve service quality, and promote QR-code-based transactions to reduce the Tk20,000 crore annual cash management burden.
Other measures include risk-based supervision through 13 new departments, implementation of IFRS 9 within two years, and restrictions on dividend payouts for banks failing to meet the 10% capital requirement.
Financial inclusion initiatives include expanding agent banking, promoting school banking (4.5 million accounts), developing digital banking and credit cards, and supporting microfinance institutions.
"Stability has so far come only in the financial sector, not the political one," Mansur noted.
"Security uncertainties remain, and investors will wait to see what changes an elected government might bring after the upcoming polls."
The event, held at the Lakeshore Hotel in Gulshan, was chaired by CPD Distinguished Fellow Professor Mustafizur Rahman, with Labour and Shipping Adviser Brig Gen (retd) Sakhawat Hossain as chief guest.
