Bangladesh Bank (BB) is reportedly examining the possibility of using the growing foreign exchange reserves at the central bank in the country's development financing by way of government borrowing.
It now exceeds US$ 37 billion which is enough to pay import bills for about more than half a year, raising question why it should be left idle and if it can be used in development financing.   
The official sources said the central bank is working on the subject following a Finance Ministry request. It started looking at the matter after a recent reference on it by Prime Minister Sheikh Hasina. She wanted to know the possibility of whether such reserves can be utilized and under what framework.
Bangladesh bank is also looking at what type of policies it may suggest the government in this respect.  
The Finance Ministry recently initiated the process in a letter to the governor of Bangladesh Bank asking him to initiate the appraisal and make suggestion on policy framework, finance ministry sources said.
BB spokesperson Sirajul Islam confirmed the matter to The Daily Observer on Sunday saying, "The matter is under review." He said they are carrying out an independent review of the entire issue as the Prime Minister's suggested.  
He said foreign exchange reserve with the BB needs to be maintained for meeting at least three months import bills payment. Export earnings, remittances and foreign investments basically contribute to the buildup of the reserves at the central bank.
Such reserves are now much higher as imports have drastically fallen  amid the pandemic and lying idle.  He said economic activities are now recovering and development spending shooting up along with the need for keeping more reserves against paying for imports.  
He also said, "Many expatriates have returned home in recent past because of outbreak of coronavirus in their host countries. It means remittance may ultimately fall."
On the other hand "it is easy to get foreign loans by the government if reserves at central bank run high," he said and added the central bank is appraising all these aspects together to make recommendations.  
The government in 2015 had initially planned to take a loan from Bangladesh Bank reserves for construction of Padma Bridge when the World Bank withheld the funding. But ultimately it didn't materialize.
Former executive director of CPD Prof. Mostafizur Rahman said, 'In a sense, Bangladesh Bank reserves are lazy fund' and in his view there is no harm if the government uses some money as a loan. It should however depend on the quality of project to be funded and what are the interest rate and repayment period.
Ahsan H. Mansoor, executive director of the Policy Research Institute said a fund could be set up with five to seven billion dollars from the reserves. There is no harm subject to the return of the money back to Bangladesh Bank reserves.