Bangladesh Bank governor Ahsan H Mansur on Thursday called for the next government to continue the ongoing reforms in the banking sector and to persist with the interim government’s efforts to recover laundered money.

Mansur, speaking at a seminar on ‘Macroeconomic Landscape: Challenges in the Banking Sector and the Path Ahead’ at the Economic Reporters Forum (ERF) auditorium in Dhaka, highlighted the challenges of repatriating laundered funds.

He said that no country has been successful in recovering such money in less than five years, but stressed that efforts must continue.

‘If this government is unable to achieve this, the next government should take this programme forward with consistency,’ Mansur said.

The special guests at the seminar organised by ERF were the Center for Policy Dialogue (CPD) distinguished fellow Mostafizur Rahman and Pubali Bank managing director Mohammad Ali.

The governor acknowledged that while there are numerous challenges facing the economy, there is no reason to be concerned about foreign exchange and reserves.

He noted that the decline in reserves has been somewhat halted, with no assistance received from the IMF.

However, remittances have increased by 24 per cent, and this month, they are expected to exceed 30 percent.

For this fiscal year, the governor projected that remittances will surpass $30 billion, with the primary reason for this surge being the successful prevention of money laundering.

Mansur also revealed that Bangladesh Bank is no longer selling dollars, and there is now almost no difference between the dollar rate in the bank and the curb market.

Addressing concerns about remittance manipulation, the governor stated that a group in Dubai attempted to manipulate the dollar rate.

However, he emphasised that the central bank was unaffected by these efforts.

On private sector credit growth, the governor explained that the decrease is due to a decline in deposit growth, rather than the increase in policy rates.

He pointed out that government debt has decreased from 12 percent to 9 percent, and now, banks will need to focus on lending to the private sector.

‘The days of lending to the government and making profits are coming to an end. Banks must now focus on making profits through lending,’ he said.

He also discussed the difficulties faced by banks when a single family controls 87 percent of a bank’s funds.

Despite these challenges, he highlighted that Islamic banks have managed to turn around and are now offering loans, largely due to gaining the trust of their depositors.

Regarding inflation, the governor explained that inflation does not occur overnight. It typically takes at least 18 months to show effects after tightening policies.

In Bangladesh’s case, it has only been six to seven months, and he anticipates it will take another five months before seeing significant improvement.

He confirmed that the monetary policy remains contractionary.

The governor outlined several steps taken by the central bank to reform the banking sector in Bangladesh since August 5.

He also said that the foreign exchange rate has stabilised, the real effective exchange rate is in a positive position, and the remittance flow remains strong.

Regarding Bangladesh’s transition from the Least Developed Country (LDC) category, the governor remarked, ‘No country in our group is now in the LDC category. Bangladesh achieved the capacity to leave the LDC in 2021. However, under pressure from our country’s industrial sector, we extended the LDC transition period to 2026.’

He also questioned why Bangladesh should remain classified as a low-income country for tariff benefits, saying, ‘There are many advantages to graduation. There is no honour in being poor. Why can’t we become a middle-income country? We are already a middle-income country. Why should we remain a low-income country for tariff benefits?’

The seminar was opened by ERF president Daulat Akhtar Mala and moderated by ERF’s assistant secretary Manik Muntasir.