Arya News - Bangladesh`s Economic Relations Division (ERD) stated that these proposals are all set to be discussed at the Bangladesh-Russia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation.
DHAKA – Amid ‘payment difficulties’ caused by Western sanctions, Russia has reportedly proposed to settle bilateral trade with Bangladesh in Indian rupees.
Besides this, the two nations look forward to revive plans for establishment of a direct banking link between them, Dhaka Tribune reported.
The move could significantly reduce the dependence on the US dollar, besides providing an alternative mechanism for transactions affected by sanctions, experts told the Bangladeshi news outlet.
Russia wants to trade in Indian rupees
Russian banks were reportedly hit by extensive US and Western sanctions after the outbreak of the ongoing war in Ukraine. This has disrupted access to conventional international payment systems.
Moscow, in reply, has expanded the use of local currencies in trade with several nations, including China and Turkey.
Dhaka Tribune highlights that Russia now wants Bangladesh to adopt a similar arrangement, wherein bilateral trade can be settled in Indian rupees through an alternative payment mechanism designed to reduce the impact of sanctions.
The Economic Relations Division (ERD) stated that these proposals are all set to be discussed at the Bangladesh-Russia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, which is scheduled for September or October. Prior to that, a preparatory meeting will be held to determine Bangladesh’s negotiating position.
Rooppur payments in focus
Russia’s proposal comes amid the difficulty in repaying loans for the Rooppur Nuclear Power Plant. Dhaka is struggling to transfer loan repayments since sanctions have restricted transactions with banks in Russia.
This comes after the earlier proposal to settle payments in Chinese yuan failed, with banks allegedly expressing concerns over potential sanctions exposure.
Currently, Bangladesh is reportedly depositing loan instalments into a Sonali Bank account that has been opened in Russia’s name as an interim arrangement. But funds are yet to be transferred to Russia, leaving billion of dollars in repayments unresolved.
Earlier, Bangladesh proposed to utilise these funds for investment projects in the country, but Russia did not agree with the same.
Meanwhile, Russia has renewed its proposal to come up with a branch of a Russian bank in Bangladesh. This proposal first came up during the Awami League government’s tenure. At that time, the Bangladesh Bank asked for the foreign ministry’s opinion on the matter, but no decision was reached.