# I have not seen so much crisis in my 36 years of service: Governor
# Controlling inflation and stabilizing the exchange rate are key challenges
In addition to taking strict measures to prevent money laundering and benami loans to overcome the current economic crisis, the Economic Reporters Forum (ERF) has suggested strengthening the surveillance of the entire banking sector, including Sharia-based banks.
Bangladesh Bank is holding regular meetings with expert economists and sector stakeholders to solve the country’s economic crisis. As part of this, ERF held a meeting on Monday (November 6). At this time, 10 journalists appeared and expressed their opinion. They gave various suggestions including reducing the pressure of inflation, solving the dollar crisis and increasing the reserves, taking strict measures to prevent money laundering and benami loans, strengthening the surveillance of the entire banking sector including Sharia-based banks.
ERF President Mohammad Refayet Ullah Meerdha led the organization’s delegation in the meeting presided over by Bangladesh Bank Governor Abdur Rauf Talukdar.
In the meeting, the governor said that controlling inflation and stabilizing the exchange rate system are the main challenges now. Various measures have been taken by the central bank to control inflation. But it does not depend only on the central bank. There are market syndicates, lack of market supervision. Again there is a matter of season.
He said, everyone knows that the economy is going through a transitional period. I have never seen such a crisis in my 36 years of service. At one time only budget deficits and foreign currency current account deficits had to be thought of. With this, the deficit in the financial account has been removed from the last part of the last year.
He said, there is a kind of uncertainty before the elections. With this, the hartal blockade has now been added. Due to a kind of uncertainty, foreign investment has reduced to zero. Short-term foreign debt and commercial debt decreased. Again the development partners are delaying the release of money. But this crisis will pass soon. We are now at the end of the tunnel. By June next year, the economy will be on the mend again. Then the financial account will be in surplus. The target of reducing inflation to 8 percent in December and 6.5 percent in June will be met. Interest has become a form of market. Soon the exchange rate system will also become market based. However, in the current reality, if the price of the dollar is left to the market, no one knows where the price will go.
Abdur Rauf Talukdar also said that it must be admitted that money laundering had reached a very bad level. 10 times the amount of money being laundered through hundi was under the cover of trade. However, over invoicing has already been reduced through LC monitoring.
He said that 13,000 Bangladeshis who have opened companies in Dubai, 2,500 Bangladeshis have taken citizenship in Portugal, it was smuggled from Bangladesh and taken there. Smuggling under the guise of trade has reduced a lot. Earlier, of the 8 billion LCs that were opened every month, only one and a half billion were over invoicing.
The Governor said that what the IMF does not consider as reserves was at one time 8 billion. It has since been reduced to $5 billion. EDF has been reduced from 7 billion to 3.5 billion dollars. From the 400 million dollars given to Biman through Sonali Bank, 1 million dollars is being returned every month. In this way, at some point there will be none of these. Then there will be no difference between IMF’s calculation and Bangladesh Bank’s calculation.
After the meeting, the President of ERF said that ERF has given suggestions on how to stabilize the economy including reducing the inflation pressure, solving the dollar crisis and increasing reserves. The biggest problem now is inflation. ERF has put more emphasis on reducing it. Besides, it has been suggested to make interest rate and exchange rate market based. In response, the governor assured that the economy will soon stabilize. He said, at the moment, no further investment will be made from the reserve.
The ERF president said that the restrictions imposed on the import of luxury goods should be properly monitored. The organization has asked to pay attention to the fact that money should not be smuggled under the guise of import and export. He said that due to repeated benefits to the defaulters, interest in repayment of loans has decreased. Hence, ERF advises not to provide loan rescheduling facility more than once. In response to this, the governor said that there are rules for rescheduling loans, no extra benefits are being given to anyone outside of this.
Banks last rescheduled defaulted loans worth Rs 63,719 crore in 2022. It has been approved by Bangladesh Bank, and the banks themselves have rescheduled. As a result, these loans were not identified as defaulters. However, at the end of last year, defaulted loans in the banking sector increased to Tk 1 lakh 20 thousand 649 crores. At the end of last June, this amount of defaulted loans exceeded 1 lakh 56 thousand 39 crores. If the rescheduled loans were marked as defaults, the non-performing loans in the banking sector would have exceeded 20 percent.