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Bangladesh's central bank assures an IMF review mission of reaching conditional NIR or net international reserves by December as nearly US$2.0 billion is expected from multilateral lending agencies.
High-ups of the Bangladesh Bank made the assurance during a series of parlays Tuesday with the representatives of the International Monetary Fund before release of the fourth tranche from a $4.7-billion lending package for stabilising the country's macroeconomic situation.
Similar assurances also came from finance adviser of the interim government Dr Salehuddin Ahmed in a separate consultation with the team of the Washington-based Bretton Woods institution.
Talking about what transpired in the meetings, BB spokesperson Husne Ara Shikha said the IMF team held several meetings with the central bankers discussing the country's current macroeconomic condition.
About the NIR target, she said the central bank would be able to meet the requirement as nearly $2.0 billion worth of funds are expected to come from global lenders like the World Bank, the Asian Development Bank (ADB) and the IMF within this month.
"So, there is no concern about the NIR," said the spokesperson, also an executive director of the BB.
Seeking anonymity, a BB official said the IMF team wanted to know reasons behind the central bank's recent direct cash feeding to some liquidity-crisis-ridden commercial banks and its benefits to the industry.
They also observed that with the cash-feeding, the money supply to the market would increase, creating inflationary pressure further.
The central bankers shared everything in detail with them and assured them that it would not trigger inflationary pressure further as they mop up same amount of the money through issuing BB bills.
Regarding the foreign exchange (forex), the IMF officials talked about the crawling-peg flexibility while the BB high-ups informed them that forex market remained stable for the last few months.
Simultaneously, the visiting IMF officials wanted to know the update about the bank resolution and modernisation of the monetary-policy frameworks. To this effect, the central bankers informed them about various measures.
Another report on the IMF review says the government is expecting to get $1.1 billion in the fourth tranche from the International Monetary Fund under its $4.7- billion credit programme for Bangladesh that aims at macroeconomic stability of the country.
The Fund mission started Tuesday the third review of the loan programme, and if found satisfactory, will recommend for its board to release the next installment of the must-have money.
The team, led by IMF Mission Chief for Bangladesh Chris Papageorgiou, met Finance Adviser Dr Salehuddin Ahmed and his team at the finance division in Bangladesh secretariat discussing the progresses Bangladesh made so far under the lending programme and the shortcomings.
Talking to newsmen after the meeting, the finance adviser said the team mainly came to review the revenue sector, fiscal deficit, budgetary targets, the strategies taken so far, and the future plans.
They will also discuss with Bangladesh Bank banking-sector reforms, default loans, presence of stress in banking sector etc, he said.
"We have argued that stability has come, though not fully, but this is definitely the time for investors and foreign donors to come," he said, referring to discussions.
Mr Ahmed said: "You will see that foreign-exchange rate is not fluctuating like in the past. Some banks need liquidity support, but Islami Bank, the biggest bank, has got stability to some extent. We are expecting the stability will also come back in case of other banks."
He terms the trend in remittance inflow very well while export growth is also not bad. Import is slightly low but has grown compared to the past and capital- machinery import is low because of some restrictions. The government is thinking what can be done about it.
"We've told them that we will take measures which will be beneficial to the future Bangladesh. We won't take any measure that the future government won't follow," he notes.
The adviser said the IMF would give Bangladesh some targets for the release of next tranche of loan. "I am not sure whether we will be able to meet those. But I am hopeful that they will give us assistance for economic development of the country."
He said the government will tell the IMF team that the country needs some additional funds. "Since we are going to conduct some reforms, some costs will be entailed."
Mr Ahmed points out that the government has already sought budget support from the World Bank. "We are expecting commitment for some $6.0 billion from multilateral donors by June next as discussed with them in Washington in October."
Last time on June 24 this year, the IMF executive board approved $1.152 billion for Bangladesh as third tranche out of the ongoing $4.7-billion lending recipe bound with strings.