Reserves have not improved despite steps by Bangladesh Bank

Bangladesh Bank has currently taken urgent measures to manage foreign exchange. They are only paying the loans which must be paid at the moment. The remaining loans are being kept pending. This is not a good practice. This may create trouble with the creditors. Debts cannot be kept pending in this way for long. Discussions has to be initiated with the creditors. A solution has to be reached through negotiations. If necessary. interest can be paid.

The total amount of Bangladesh Bank's reserves is as per IMF's BPM 6 calculations. This reserve includes foreign currency clearing of the different commercial banks and dues of Asian Clearing Union. The Bangladesh Bank can use the remaining reserves. The central bank has to work so that reserves do not decrease further. I would say that the situation has not improved although Bangladesh Bank has taken various measures.

Harsh measures have to be taken to increase reserves. After the election, the dollar price has to be left to the market as there is no time to do this before the election. The rate of interest of the central bank has to be raised a bit more before leaving the dollar rate to the market.

The policy interest rate has been raised a few days ago, but needs to be raised a bit more. It has to be done so that the supply of money decreases in the market. If the interest is raised, the demand will decrease and taka as a currency will be attractive, meaning the value of taka will increase.

Simultaneously the expenditure of the government has to be decreased. Some steps have been suggested to lessen public expenditure. The issue of decreasing public expenditure has to be ensured so that loans are not taken by printing taka if the revenue collection falls. The currency and revenue policy has to be made stringent.