Rejaul Karim Byron and Md Fazlur Rahman

The government is revisiting the idea of using currently healthy foreign currency reserves boosted by the drastic fall in imports and injection of budget support from external sources to bankroll major projects.

The idea came from Prime Minister Sheikh Hasina, Planning Minister MA Mannan told reporters yesterday.

The argument is the reserves have shot past $36 billion, the highest in the country’s record, and Bangladesh has to borrow from external sources to finance large projects.

Now, the finance division and the central bank would explore the possibility of using the reserves to implement major projects, Mannan said.

“This is a groundbreaking proposal. We now have to formulate the guidelines,” he said, adding that the government would ensure a reserve equal to three-months import bill.

Foreign currency reserves have been setting up new records for the last two months. In May, it first touched $34 billion and then $35 billion before climbing to $36 billion.

But the ballooning reserves are largely due to a slump in import payments because of the shutdown caused by the pandemic and the large disbursement in budget support from the Asian Development Bank (ADB), the International Monetary Fund (IMF), the World Bank (WB), the Asian Infrastructure Investment Bank and the Islamic Development Bank.