A part of the export earnings is not coming home. According to Bangladesh Bank officials, export earnings worth US$10 billion have been stuck abroad in the last two years, and banks have been instructed to bring this non-repatriated money back home.
However, economists remain skeptical about how effective the central bank’s initiative will be.
In a letter sent to banks on October 2, Bangladesh Bank said the entire export earnings in the 2021-22 and 2022-23 financial years should be repatriated to the country through exporters within October 31. If they fail to bring them back within the stipulated time, action will be taken against the persons concerned as per the Foreign Exchange Control Act. It has been learned that there is a provision to register a case under this law. According to law, the money has to be returned within 120 days of export.
According to Bangladesh Bank sources, the amount of unrepatriated money is approximately US$1 billion. However, it also includes export proceedings relating to counterfeiting, counterfeit exports and bankruptcy of purchasing agencies.
Central bank officials say that this includes fake export bills of Hallmark, Bismillah and Crescent Group. Besides, money is also stuck with many procurement agencies that went bankrupt during the coronavirus pandemic.
Cases are going on in foreign countries on these issues. Therefore, it will take time to bring the entire amount back to the country. However, at least half of the US$10 billion stuck abroad could be quickly repatriated.
Earlier, the central bank had ordered exporters to encash 50 per cent of the foreign exchange held in exporters’ retention quota (ERQ) accounts within the shortest possible time. Central bank officials hoped that this initiative would increase the supply of dollars in the markets. However, banks are unable to exchange currencies as per demand, resulting in a decline in LC opening.
According to Bangladesh Bank, the pressure on foreign exchange reserves will reduce when export earnings come home and failure of export earnings to come into the country within 120 days is considered money laundering.
People in the banking sector believe that central bank initiatives will not ease the crisis unless a market-based exchange rate is implemented. There is no alternative to introducing 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