BD Falls Short of IMF’s Foreign Exchange Reserve Requirement

In the first three months of the current fiscal year, the Bangladesh government nearly doubled its borrowing from commercial banks, increasing it to Tk47,209 crore from Tk24,474 crore last year, a 93% rise. This spike is primarily due to lower revenue collection and attractive high interest rates on treasury bills and bonds, as demand for private sector loans declines.

The interim government of Bangladesh has begun the process to join the Regional Comprehensive Economic Partnership (RCEP), an economic bloc accounting for one-third of global GDP. The previous administration had paused this initiative due to recent elections. A meeting in August 2023 indicated that joining RCEP could boost Bangladesh's exports by 17.37%.

The ownership pattern in Bangladesh's government securities (G-sec) market is shifting as individual and institutional investors increasingly dominate, moving funds away from banks. This change is driven by higher returns from treasury bills and bonds, resulting in stagnant deposit growth for banks, which currently ranges between 9% and 10.5%.

At the beginning of the current fiscal year, the ousted Awami League government borrowed extensively from bank and non-bank sources, exceeding BDT 232 billion in July alone, according to the Bangladesh Bank. Net borrowing from banks reached BDT 189.08 billion, a significant increase from BDT 6.9 billion in July of the previous year, coinciding with widespread student protests for quota reform that disrupted normal life and business activities. Borrowing from non-bank sources also rose sharply to BDT 42.94 billion, up from BDT 9.33 billion last year.

Bangladesh's Ministry of Finance has initiated a redesign of all banknotes, leading to speculation about the removal of Sheikh Mujibur Rahman's image from currency. In a recent letter, the ministry requested proposals from the Bangladesh Bank for new designs, suggesting that keeping Mujib's image might not be a priority. 

The government has announced a nine-member "Constitutional Reform Commission" headed by Professor Ali Riaz, replacing the previously named Shahdeen Malik. The commission includes legal experts, professors from Dhaka University, a human rights activist, and a student representative. Formed on October 7, the commission will begin work from October 6 and is tasked with submitting a report within 90 days.