A portion of export proceeds is not coming home. According to Bangladesh Bank officials, export proceeds of USD 10 billion have remained stuck in foreign countries over the past two years, and banks have been instructed to bring back this non-repatriated money home.

Economists, however, are doubtful over how much the central bank’s initiative would be effective

In a letter sent to the banks on 2 October, the Bangladesh Bank said the entire export earnings in 2021-22 and 2022-23 fiscals must be brought back to the country through the exporters within 31 October. Actions will be taken against the concerned persons in case they fail to repatriate them within the stipulated time as per the Foreign Exchange Control Act. It has been learnt that there is a provision to file cases under this law. As per the law, the money has to be repatriated within 120 days of export.

According to the sources in the Bangladesh Bank, the amount of non-repatriated money is nearly USD 1 billion. However, it includes export proceedings related to counterfeiting, fake exports and bankruptcy of buying agencies.

The central bank officials say it includes the fake export bills of Hallmark, Bismillah and Crescent Group. Besides, money has also been stuck with several buying agencies which went bankrupt during the coronavirus pandemic.

Cases are on over these issues abroad. Therefore, it will take time to bring the entire amount of money back to the country. However, at least half of the USD 10 billion stuck abroad can be repatriated speedily.

Before this, the central bank ordered the exporters to encash 50 per cent of the foreign currency held in the exporters' retention quota (ERQ) accounts within the shortest possible time. Central bank officials expected this initiative would inject a supply of dollars into the markets. However, banks have been unable to exchange currencies as per demand, resulting in a fall in the opening of LCs.

According to Bangladesh Bank, pressure will lessen on foreign currency reserves once earnings from exports come home, and earnings from exports do not arrive in the country within 120 days is considered money laundering.

People concerned from the banking sector think the central bank's initiatives would not mitigate the crisis unless the introduction of the market-based exchange rate. There is no alternative to launching a market-based exchange rate to increase the supply of dollars.

This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna

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