Bangladesh is in talks with the International Monetary Fund for an additional $3 billion loan, according to BBC and Bloomberg reports.
In an interview with Bloomberg, Bangladesh’s new central bank Governor Ahsan H Mansur said the loan is needed to recover from the recent political turmoil that the country went through. The bank is also buying dollars from local banks to meet unpaid debt.
Bangladesh secured $4.7 billion in funding from the IMF last year. Mansur said he was in a conversation with the Washington-based financial body to “augment” and “front load” this amount by an additional $3b, reports BBC.
He said Bangladesh was also seeking an additional $1.5b from the World Bank and $1b each from the Asian Development Bank and the Japan International Cooperation Agency.
The country is only just emerging from weeks of upheaval following deadly protests that forced the ouster of prime minister Sheikh Hasina earlier this month.
The violence that accompanied the anti-government protest has disrupted the garment exports, the country’s main foreign exchange earner.
Reserves were already under pressure before the current crisis, and stood at $20.5 billion as of July 31, just enough to cover about three months of imports, reports Bloomberg.
Mansur, a veteran economist who spent three decades at the IMF, was named governor of Bangladesh Bank last week by the interim government headed by Nobel laureate Professor Muhammad Yunus.
The former Governor Abdur Rouf Talukder and two other deputy governors resigned as part of a string of bureaucratic departures following the fall of the previous government.
The central bank bought more than $200 million in three days from the interbank market since Mansur was appointed governor at Bangladesh Bank on Aug 13, reports Bloomberg.
Dr Mansur said the central bank aims to buy as much as $1 billion every month from local banks.
In the BBC interview, he emphasised that cleaning up the country’s banking sector was his top priority when speaking to the BBC at the central bank’s headquarters in the commercial heart of Dhaka.
There has been a “designed robbery of the financial system” which has caused significant damage to banks and has serious implications for the stock market and the broader economy, he suggested.
Bangladesh’s banks have seen a flight of deposits and an alarming rise in non-performing assets following defaults by groups allegedly linked with the ousted Awami League government.
The non-performing assets were “just robbery of the banks. They took the money and put it in Singapore, Dubai, London and elsewhere. So the first effort would be to try to take people to task and get the money back,” Dr Mansur told the BBC.
