The new central bank chief has told the BBC in an exclusive interview that Bangladesh will make a decision to increase interest rates from 8.5 % to 9 % in a day or two.
Dr. Ahsan H. Mansur promised to increase prices even further to 10 % or more in the upcoming times to tame inflation.
Bangladesh’s currency is under pressure due to remittances drying up, and social unrest has had a big impact on its exports. Soaring prices have also been a major concern.
Bangladesh was instructed by the International Monetary Fund ( IMF) to tighten its monetary policy and maintain a flexible exchange rate during the course of a$ 4.7 billion ( £3.6 billion ) bailout for the South Asian nation.
Dr. Mansur claimed to be talking about “augmenting” and “front loading” this sum by an additional$ 3 billion.
He stated that Bangladesh was also looking for an additional$ 1.5 billion from the World Bank and$ 1.3 billion from the Asian Development Bank and the Japan International Cooperation Agency.
Charges have also been impacted by the internet blackouts and restrictions that came before the expelling of Prime Minister Sheikh Hasina’s plan earlier this month.
Dr. Mansur, a former economist who worked for the IMF for three decades, was appointed chancellor of Bangladesh Bank by the time administration, led by Nobel laureate Muhammad Yunus, last week.
As part of a series of governmental departures following the recent downfall of the previous state, former government Abdur Rouf Talukder and two other assistant rulers resigned.
When Dr. Mansur addressed the BBC at the main company’s office in Dhaka’s business soul, he made the point that cleaning up the nation’s banking industry was his best concern.
According to him, there has been a “designed assault of the economic technique,” which has seriously impacted businesses and the property market and the economy as a whole.
Following failures by groups allegedly linked to the ousted Awami League state, Bangladesh’s lenders have seen a drop in payments and an alarming increase in non-performing property.
The non-performing property were” only robbery of the lenders. They took the money and put it in Singapore, Dubai, London and abroad. Therefore, Dr. Mansur said the first step would be to attempt to punish those who violate the law and recover the money.
” While doing this in parallel, we will have to recreate the finance program. So we are trying to establish a Banking Commission”.
The work of this percentage will be to do a thorough assessment of the banks and suggest remedies such as change of plank, modify of management, injection of capital, or in the case of some smaller banks, mergers.
Dr. Mansur anticipates that some of Bangladesh’s Islamic banks will need between$ 30 and$ 30 billion to recapitalize them, which could in turn result in their nationalization.
” We do not want it.. but]a ] lot of loans have been incurred by these people, and they are not going to pay it back… We have to at least cover the depositors ‘ money”, he added.
The governor anticipates a sharp reduction in spending despite the ongoing economic unrest along with reforms in monetary policy from Bangladesh’s new government.
Prime Minister Sheikh Hasina’s government had cut spending and lowered the country’s fiscal deficit target to 4.6 %- the lowest since 2015, according to Bloomberg.
However, there will need to be a further 9 to 10 % reduction in budgetary spending, according to Dr. Mansur,” so that more credit is made available for the private sector.”
Late last week, Muhammad Yunus, the Chief Adviser to Bangladesh’s interim government, is reported to have told a gathering of diplomats that his government will undertake” comprehensive reforms” before holding the next general election.
When questioned how long until the election could be called, Dr. Mansur said it might take another three years or more.