Originally posted in The Business Eye on 28 June 2024
Bangladesh has achieved a significant milestone as its foreign exchange reserves have surged to a record high of $27.15 billion, bolstered by substantial financial inflows from international lenders.
According to Mezbaul Haque, Executive Director and Spokesperson of Bangladesh Bank, the country’s central bank, this milestone reflects robust support from global financial institutions.
In an exclusive interview with Business Eye, Mezbaul Haque disclosed that the International Monetary Fund (IMF) has contributed $1.15 billion to Bangladesh’s foreign exchange reserves. Additionally, approximately $900 million has been received from other key sources, including South Korea, the International Bank for Reconstruction and Development (IBRD), and the Islamic Development Bank (IDB).
“This infusion of funds has significantly bolstered our foreign exchange reserves, reflecting confidence in Bangladesh’s economic stability and growth prospects,” stated Mezbaul Haque.
The steady rise in foreign exchange reserves is crucial for Bangladesh, as it enhances the country’s ability to manage external shocks, ensures import coverage, and supports investor confidence. The achievement underscores Bangladesh’s strong economic management and effective collaboration with international financial partners. As Bangladesh continues to navigate global economic challenges, the robust growth of its foreign exchange reserves stands as a testament to prudent fiscal policies and strategic partnerships with global financial institutions. The country remains committed to sustaining this momentum and leveraging its enhanced financial resilience to foster inclusive economic development and prosperity.
The dwindling foreign exchange reserves in Bangladesh are raising concerns over the country’s macro-economic stability, according to Prof. Dr. Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD). The reduced reserves, exacerbated by lower imports, are not only impacting trade and business but also posing significant risks to the overall economic growth trajectory.
Prof. Dr. Mustafizur Rahman highlighted the critical role of foreign exchange reserves in maintaining economic stability and managing external shocks. “The squeezing reserves situation is imposing serious risks on Bangladesh’s macro-economy,” he cautioned in a recent statement.
Bangladesh’s foreign exchange reserves have experienced a decline recently, influenced by factors such as reduced imports and varying global economic conditions. The lower level of imports, while partly due to economic slowdowns worldwide, has also been affected by domestic factors, impacting the country’s trade balance and economic performance.
“The decline in reserves affects the country’s capacity to cushion against economic vulnerabilities and maintain stability in currency exchange rates,” Prof. Dr. Rahman emphasized. He urged policymakers to consider proactive measures to address these challenges and ensure sustainable economic growth.
As Bangladesh navigates these economic challenges, stakeholders are closely monitoring developments to implement effective strategies aimed at bolstering foreign exchange reserves, enhancing trade dynamics, and promoting robust economic recovery.
The observations by Prof. Dr. Mustafizur Rahman underscore the urgency for comprehensive economic reforms and strategic interventions to safeguard Bangladesh’s economic resilience amid evolving global dynamics.