Bangladesh eyes $2b loan to stabilise balance of payments amid Mideast tensions: BB Governor

Bangladesh is planning to seek $2 billion in foreign assistance to counter economic pressures arising from domestic crises and the volatile situation in the Middle East.

The initiative aims to stabilise the country's Balance of Payments (BoP) through support from global lenders, including the International Monetary Fund (IMF).

Governor of Bangladesh Bank Md Mostaqur Rahman shared this strategic plan during an exchange meeting with senior economic journalists held on Sunday at the central bank’s headquarters in Motijheel.

The Governor confirmed that discussions are underway to secure $2 billion to safeguard the economy. "We have already initiated talks with the IMF, and the Economic Relations Division (ERD) is exploring other potential sources," he said.

Highlighting the uncertainties in the Middle East, the Governor emphasised a policy of caution. "We are adopting a 'wait and watch' strategy to navigate the current geopolitical tensions," he noted.

Governor Mostaqur outlined his administration's top three priorities: strengthening food security and the rural economy, supporting small and medium enterprises as the backbone of the economy, and addressing closed factories, which he described as "national assets." He urged banks to assist in restarting these factories to boost employment without causing inflation through new large-scale investments.

He maintained a firm stance on monetary policy, stating that reducing interest rates is currently not advisable as the central bank remains focused on controlling inflation.

The Governor expressed satisfaction with the current foreign exchange reserves. Regarding remittances, central bank officials projected an increase of $2 billion to $2.5 billion by the end of this fiscal year compared to the previous one, despite the Middle East crisis.

During the two-hour session, Deputy Governors Md Habibur Rahman and Nutun Nahar and the central bank spokesperson Arif Hossain Khan also presented in the event.

The governor addressed concerns about expatriate welfare and potential job losses abroad. He suggested that in times of crisis, migrants often send back their total savings, providing a short-term boost to reserves, though they acknowledged long-term risks if conflicts escalate.

"Since the pandemic and the Russia-Ukraine war, it seems we must learn to move forward amidst such global challenges," Governor Mostaqur remarked, concluding the meeting with a commitment to maintaining market stability.