Bangladesh’s foreign exchange reserved touched a record high of $35.09 billion on Tuesday.
For the first time in its history , it crossed the $ 35 billion mark , buoyed by falling import payments and moderate inflow of remittance.
The reserve hit new record on June 23 in just 20 days of hitting $34 billion mark on June 3, this year.
Remittance inflow has led to the increase in the foreign reserve, again proving the strength of Bangladesh’s working class driven economy.
” The working class is the real backbone of Bangladesh economy. High productivity at low wages makes the country’s garment sector a huge success , not really design innovation or financial management. Similarly labour export coupled with the worker’s faith in saving in his own country boosts its economy,” said economist Mrinal Chakma .
Foreign loans and assistance have also contributed to obtain the new record of foreign exchange reserve, according to Bangladesh Bank.
It’s mainly because of the steady remittance inflow in June that has taken the country’s reserve to $35 billion mark, BB spokesperson said .
Earlier, the previous highest reserves, $33.68 billion, were recorded on September 5 in 2017, according to Bangladesh Bank data. The fall in import payment, especially the luxurious items, has helped attaining the record reserves of foreign currency.
Besides, the government has received a number of credit payments from the overseas lenders to tackle the coronavirus pandemic that also contributed to the increase in foreign exchange reserve.
Bangladesh Bank former governor Dr Atiur Rahman had proposed the government on various occasions to invest the growing foreign exchange reserve fund in the construction of Padma bridge (the biggest bridge of the country made by its own tesources challenging the World Bank’s allegations of bribery) .
Rahman was emboldened by the huge boost in foreign exchange reserve that had risen to $31.16bn in August ,2015 , from a meagre $4bn when the Hasina government took office in 2009.
This is a big news for Bangladesh . Dr Atiur said.
” Forex reserve is always the source of power, an asset for the central Bank. It must keep the Forex reserve high , because that will boost our credit rating , as a result of which one can attract more loans from IMF and World Bank to develop infrastructure that in turn will boost growth.”
‘ The Economist’ has placed Bangladesh on the ninth position in terms of different indicators of financial strength among 66 emerging markets in peril over the coronavirus crisis.
The Economist has ranked the countries using four potential sources of peril. These include public debt, foreign debt, and borrowing costs.
China is just behind Bangladesh while Botswana has been placed first, according to the rankings published by the magazine on 2nd of May. The others ahead of Bangladesh are Taiwan, South Korea, Peru, Russia, Philippines and Thailand.
It has also calculated their likely foreign payments this year and compare this with their foreign exchange reserves. “The damage to exports will be acute. Thanks to low oil prices, Gulf oil exporters will suffer a current-account deficit of over 3% of GDP this year, the IMF reckons, compared with a 5.6% surplus last year,” the magazine said of the economic impacts of the pandemic.
When exports fall short of imports, countries typically bridge the gap by borrowing from abroad, it said. One way to ensure countries have more hard currency is to stop taking it from them, The Economist said.
But Dr Rahman warned that Bangladesh must accord top priority to fighting ‘leakages’ due to corruption and money laundering, which , if controlled , can boost the country’s GDP by several notches.
Rahman, always a vocal advocate of tough anti- laundering and anti-corruption measures , had to step down as BB governor in the face of strident backroom conspiracy by a powerful section of stock market scamsters and bank defaulters who have even managed a foothold in the PMO.
Global financial circles see in Atiur Rahman , who was won many awards for BB’s performance under his stewardship, a future Finance Minister, a Manmohan Singh kind of a reformer with a profile to match Bangladesh’s amazing growth story.
” Bangladesh needs quality financial leadership, not patrons of wheeler-dealers at the top, to back the amazing toil-and-grow path of its hardworking people,” said a serving World Bank official , but unwilling to be named because he was not authorised to speak to media.