Special Correspondent: Faced by global economic downtrend out of the deadly coronavirus pandemic the business people of multiple potential sectors are eyeing to bag loans from the country’s ballooning foreign exchange reserves, industry insiders said.

In a bid to support the country’s growing economy and sustain the overall growth trajectory the government has recently moved to utilize for the first time the country`s idle foreign currency to implement various development projects.

The government is now carrying out a study to select the probable projects where forex reserves will be invested and the Prime Minister`s Office also is working on it for quick implementation of the plan.

The government would pick those projects for the foreign currency loans that would have a high rate of return so that it can repay the loans also in the foreign currencies, said a senior official of the Ministry of Finance.

The funds would be repaid in foreign currencies so that the reserves remain the same, he added.

Sources said, the government has planned to utilize idle foreign currency reserve when the country`s forex reserve mounted to a new height of around $40 billion in early this month riding on robust flow of inward remittance supported by 2.0 per cent incentive bonus introduced by the government, growth in export earnings and fall in imports due to coronavirus pandemic.

The growing budgetary support and loans from the Asian Development Bank, the International Monetary Fund, the World Bank, the Asian Infrastructure Investment Bank and the Islamic Development Bank also helped swelling up the country’s foreign currency reserve in highest level in its history.

Currently, the country’s business sectors are facing difficulty in doing businesses due to higher interest rates against the backdrop of global economic downfall due to coronavirus pandemic, said a top leader the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), supporting the government move.

Loan support from foreign currency reserve will help the industrial sector to boom, he said, adding.

He, however, stressed that the loan should be given to the potential business project alone that has the capacity to pay back it with interest.

The interest rate against the foreign currency reserve should not be over 2.0 per cent.

Like many other potential sectors the country’s energy and power sector should also get loan from the country’s foreign currency reserve, said a senior leader of Bangladesh Independent Power Producers Association (BIPPA).

Power sector is one of the prime and national important sectors of the government.

Investment in power sector is guaranteed as the government is the only off-taker here. Bangladesh has long reputation of regular payment to the sponsors and lenders in power sector and has never failed.

Bangladesh’s Power System Master Plan, or PSMP, has a mix of different fuel-based plants including natural gas, oil, coal, liquefied natural gas, renewable, etc.

Natural gas and coal-fired power plants are among the cheapest in tariff and are being considered as the most suitable based load plants in the country, which are necessary for boosting the country’s economy.

A leader from the country’s highest export earning readymade garment sector said the government should provide loan from foreign currency reserve keeping significant amount of money in reserve to carry out the import expenses of around nine to 10 months ensuring credibility of import LCs, or letter of credits.  

He said the interest rate should be at per with the London Inter Bank Offered Rate (LIBOR).

The business people also want that the government would create a separate fund to support business sectors from the idle foreign currency reserve, which, they said, should be disbursed in a prudent way.