Bangladesh fulfills IMF conditions on reserves

Abu Sufian

Bangladesh has fulfilled the conditions of foreign exchange reserves given by the International Monetary Fund (IMF). Even though most of the country’s banks are in a dollar crunch,

Bangladesh Bank has collected dollars from various banks to maintain reserves as per IMF conditions. In addition to import control, Bangladesh Bank has succeeded in preserving reserves as a result of multi-faceted activities to encourage a sending of remittances through banking channels,

continued growth of export income and quick loan disbursement from the IMF. According to data, the net reserves of the central bank at the end of December 31 stood at about $17.7 billion. The $4.7 billion loan from the IMF was conditional on maintaining net reserves of $17.48 billion by the end of December 2023.

As such, the central bank has exceeded the target given by the IMF in maintaining net reserves. Bangladesh has received the second installment of the IMF loan as it has met most of the conditions (except two) given by the IMF.

Quantitative targets such as budgetary, social expenditure, capital investment in development work and ceiling on reserve funds were met earlier.

Other initiatives taken on the advice of the IMF included the adoption of a corridor system for setting interest rates, reporting of reserves as per the IMF’s BPM-6 definition and introduction of market-determined exchange rates for currencies.

The central bank was supposed to publish the financial stability report of the banks besides finalizing the risk-based supervisory action plan.

A mission led by Rahul Anand, head of the IMF’s Asia-Pacific Division, arrived in Dhaka on October 4 to review the progress in meeting time-bound conditions.

The mission held meetings with various ministries, departments and organizations for more than two weeks. The mission came to hold the first review meeting before disbursing the second installment of the loan.

At the end of the meeting, the IMF team found that Bangladesh had not achieved the reserve and revenue collection targets.

At the time, spokesperson and Executive Director of Bangladesh Bank, Majbaul Haque, also said that the government had fulfilled six conditions for last June.

But two conditions could not be fulfilled. Before the grant of the second installment loan to Bangladesh, he said that although significant achievements had been made in several areas, targets had not been achieved in two areas.

They are maintenance of fixed reserves and collection of tax revenue at fixed rates.

More News Of This Category