Withdrawals outpaced investments in the first half of FY23

The government has decided to review contracts signed under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, commonly known as the indemnity act, which allowed public contracts to be awarded without tenders and shielded government actions in the energy sector from judicial scrutiny.

During a press briefing, the Finance Adviser outlined key initiatives to address pressing economic issues. He acknowledged calls from various sectors to recover laundered money, noting that forming a task force to tackle the issue is under consideration. Bangladesh Bank’s Governor supported this, mentioning ongoing discussions with the World Bank, the US, and the UK to facilitate the recovery of the illicit funds.

Bangladesh is shifting towards a free-floating currency system by redirecting banks to obtain foreign exchange 

from the interbank market instead of receiving direct dollar sales from the central bank. This policy change aims to address the country's rapidly depleting forex reserves. Previously, the Bangladesh Bank (BB) sold $12.80 billion and bought $3.38 billion in the fiscal year 2023-2024, but has now reduced sales significantly, with $678 million sold in July and $170 million in August, while buying only $115 million.

Bangladesh can utilize the Stolen Asset Recovery (StAR) framework, established in 2007 by the UNODC and the World Bank, to reclaim laundered money from abroad. The framework was previously employed by the British government in 2010 and 2015 to recover funds stolen from the UK and sent to Bangladesh by scammers.

Bangladesh is seeking a $6 billion budget support package from international lenders. The Ministry of Finance (MoF) aims to secure $1 billion each from the World Bank, the Asian Development Bank, and the Japan International Cooperation Agency, with an additional $3 billion requested from the IMF. The proposal letter has been sent following preliminary discussions, and formal negotiations are expected to begin soon.

The French Ambassador to Bangladesh offered "technical, legal, and institutional" support to Bangladesh for its reform agenda, focusing on curbing corruption and reforming governance and financial systems. This offer came during her maiden courtesy call on Foreign Affairs Adviser in Dhaka, where she presented a congratulatory message from the French Minister for Europe and Foreign Affairs.