Finance Adviser Dr Salehuddin Ahmed on Tuesday defended Bangladesh Bank's recent move to mop up nearly $2 billion from the market, saying the central bank was right to keep the exchange rate stable even as demand for the US dollar has temporarily eased, reports UNB.
Speaking to reporters after meetings of the Advisors Council Committee on Government Purchase and the Advisors Council Committee on Economic Affairs, he acknowledged concerns that importers -- particularly those bringing in raw materials and capital machinery -- might feel pressured by the central bank's stance.
"Some argue that if demand for the dollar goes down, the price should also fall. But if we let the exchange rate slide without restraint, it will send a bad signal to those who send remittances. Remittances are one of our strongest lifelines and we have to keep their interests in mind," he said.
Dr Salehuddin stressed the importance of maintaining sufficient reserves for emergencies.
"Our reserve position is not yet self-sufficient. Suppose there is a crop failure -- we would need to import immediately. What would we do then if we don't have the cushion? Foreign exchange is not only for imports; it also provides a safeguard against unforeseen shocks," he noted.
He recalled the challenges of 2007-08 when Bangladesh weathered global and domestic pressures with the help of reserve buffers. "That experience reminds us why the central bank is acting prudently now."
Bangladesh Bank has recently stepped up efforts to stabilise the forex market purchasing nearly $2 billion from commercial banks.
According to BB data, total dollar purchases through auctions have already reached $1.74 billion in the current fiscal year.
Stronger remittances and exports, along with the central bank's buying spree, have lifted reserves to $25.67 billion as of September 11, according to IMF calculations -- up from $24.50 billion a year earlier.
In the three years leading up to FY2024-25, the central bank sold over $25 billion from reserves to pay for fuel, fertiliser, and food imports.
But after the fall of the Awami League-led government in August last year, it suspended dollar sales for government imports, citing depleted reserves.
In May, BB adopted a floating exchange rate regime to meet IMF loan conditions, a year after introducing a crawling peg.
The Advisors Council Committee on Government Purchase approved a proposal for importing 35,000 tons (±10%) of Muriate of Potash (MOP) fertiliser from Russia under a state-level agreement.
The committee gave the nod to the Ministry of Agriculture's proposal at its meeting on Tuesday.
As per the proposal, each tonne of MOP fertiliser will cost US$361. The total value of the consignment has been estimated at Tk 1.54 billion (154.90 crore).
The Advisers Council Committee on Economic Affairs on Tuesday approved a major project revision involving over Tk 2.90 billion (290 crore) for upgrading the Hazrat Shahjalal International Airport in Dhaka and the Shah Amanat International Airport in Chattogram.
The approval came at a meeting of the committee held at Secretariat with Finance Adviser Dr Salehuddin Ahmed in the chair.
For Shah Amanat International Airport, the committee approved a revision to the project titled "Strengthening of Existing Runway and Taxiway (1st Revised)."
The original contract valued at Tk 4.72 billion (472 crore) will now increase by Tk 1.32 billion (132 crore), raising the total to Tk 6.05 billion (605 crore) -- a 16.39 per cent rise.
The project is being implemented by MIR AKHTER-CAMCE JV, based at Red Crescent Borak Tower in Dhaka.
At Hazrat Shahjalal International Airport, the project "Installation of CNS-ATM (Communications, Navigation and Surveillance-Air Traffic Management) System including Radar (1st Revised)" also received the committee's approval.
The original contract of Tk 6.58 billion (658 crore) will rise by Tk 1.58 billion (158 crore), bringing the revised total to Tk 8.17 billion (817 crore) -- a 24.13 per cent increase.
French aviation technology company THALES LAS FRANCE SAS has been appointed as the contractor.
The CNS-ATM and radar installation at Shahjalal Airport will modernise Bangladesh's air traffic surveillance and navigation systems, aligning them with international aviation safety and efficiency standards.
The committee said both proposals were crucial for strengthening Bangladesh's aviation infrastructure which has been under pressure from increasing passenger volumes and cargo traffic.
The recommendations will now go to the Advisers Council Committee on Government Purchase for final approval before implementation.
The Economic Affairs Committee also gave policy approval to several procurement and contract extension proposals including fertiliser and fuel imports as well as contractual extensions for consultants under the Civil Aviation Authority of Bangladesh (CAAB).
The committee recommended policy approval for the import of Triple Super Phosphate (TSP) fertiliser from Agrofertrans Limited, UK, which has authorisation from Egypt-based NCIC, under a government-to-government arrangement. The proposal was placed by the Ministry of Agriculture.
