Uniform exchange rate from July, Commerce tells IMF

The commerce ministry has informed the International Monetary Fund (IMF) that a uniform exchange rate of the US dollar will be introduced for importers and exporters from July this year.

In a meeting with the Senior Secretary of the commerce ministry Tapan Kanti Ghosh on Tuesday, the IMF reiterated its call for introducing a unified exchange rate for imports and exports.

In addition, the global lender raised concerns about exporters intentionally not bringing in export proceeds to the country.

Moreover, the IMF took note of the expected export income of the current and the next fiscal years in the meeting.

The IMF, for the first time, is reviewing the progress Bangladesh made so far in meeting its conditions for the $4.7 billion loan. The first tranche of $476 million was given to Bangladesh in February. 

A delegation of eight members of the organisation has been meeting with various ministries and organisations since 25 July to collect various information.

When asked about the meeting with the IMF, Tapan Kanti Ghosh told The Business Standard, "The IMF wanted to know what will happen if there is a uniform exchange rate for exports and imports. I said it would be better. The governor of the Bangladesh Bank also agrees with this. The central bank will implement a uniform exchange rate for export and import from next July."

According to Bangladesh Bank sources, the official dollar rate for exporters is now Tk106. But the importers said they have to buy dollars from banks at Tk113-114 for opening letters of credit (LCs).

IMF on export proceeds

In the meeting, the IMF wanted to know whether exporters are repatriating their proceeds in due time or intentionally delaying the process. Quoting the Bangladesh Bank, the IMF told the secretary that the amount of non-repatriated export proceeds has risen to $3 billion.

In response, the secretary said the information that the exporters are not repatriating the export earnings is not correct. And whether the non-repatriated export earnings amounted to $3 billion in one year or is a cumulative figure of the past few years, needs to be reviewed. 

Tapan advised the IMF team to analyse the extent of non-repatriated export earnings before Covid.

According to Bangladesh Bank regulations, export earnings have to be repatriated within three months of shipments. If the foreign buyer fails to pay on time, the exporter can extend the repatriation time by another three months, subject to the approval of the central bank.

According to the Bangladesh Bank, the amount of proceeds that has not been repatriated within three months of export is about $3 billion and almost half of the amount not repatriated exceeded the 180 days period.

The commerce secretary told the IMF that the Bangladesh Bank will be able to provide information as to why some of the export earnings are not being repatriated on time.

The IMF also wanted to know about the growth of export income in the current financial year, as well as the government's measures to boost export earnings.

In response, the commerce secretary said that the growth in exports in the last fiscal year was about 35%. The growth rate in the first nine months of this fiscal year is slightly more than 8%. 

Tapan Kanti told the IMF, "More than half of our export earnings come from the European Union and the United Kingdom. Consumers in these countries have reduced their purchases due to high inflation. The rate of inflation in the United States is also about 10%. Bangladesh has no hand in increasing the purchasing power of the buyers of these countries. As a result, the growth of export income this year will be lower than last year." 

The export growth in the main markets of Bangladesh is decreasing, but the income is increasing in non-traditional markets including South Korea and Japan, the secretary added.

In response to the IMF's query about the steps taken by the government to increase export earnings, the commerce secretary said the government is simplifying business processes. The renewal period of various licences has been extended to five years. Through this, efforts are being made to reduce the cost of doing business for businessmen and exporters. Initiatives have also been taken to expand new markets and new products.

Quarterly reports on GDP from 2024: BBS tells IMF

The Bangladesh Bureau of Statistics (BBS) has decided to prepare and release quarterly reports on the country's Gross Domestic Product (GDP) from 2024.

The move comes following the conditions put forth by the International Monetary Fund (IMF) for the $4.7 billion loan for Bangladesh.

Besides, the BBS has also finished compiling all necessary data related to the country's GDP spanning 50 years since independence.

Following a meeting with a delegation of the International Monetary Fund (IMF) in Dhaka on Tuesday morning, BBS Director General (DG) Md Matiar Rahman told TBS, "We are working as per the directives issued by the Finance Division who are realising guidelines set by the IMF."

"We have also informed the international lender about updating our consumer price index (CPI). Data related to 722 food and non-food items under a total of 12 categories have been collected. The previous CPI includes 412 items under eight categories," he said. 

Secretary of Statistics and Information Management Department Shahnaz Arefin among other senior officials of BBS were present at the meeting.