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Negotiators are upbeat about receiving the stalled IMF funds as the central bank agrees to make exchange rate more flexible or lift control as part of advice of the multilateral lender.
The major move for getting fourth and fifth tranches of the International Monetary Fund's $4.7- billion lending package by upcoming June came probably a day before the final deadline of The Bretton Woods institution regarding disbursement of the funds was destined to expire on May12, sources at the Bangladesh Bank (BB) said.
In fact, the stalemate over getting the IMF funds arose centering around the exchange rate as an IMF mission to Bangladesh kept pushing for a more flexible exchange regime while their Bangladeshi counterparts were opposing the recommendation on grounds that it could create volatility on the foreign-exchange market, which remained stable for the last few months following troubleshooting action.
Following suggestion of the IMF, the central bank introduced a reference rate-centric exchange system with necessary changes in the non-crawled crawling-peg mechanism on December 31st, 2024.
The following day, the banking regulator issued another instruction directing the commercial banks to keep a Tk1.0 margin between the buying and selling of each American greenback.
The IMF took serious exception as it smells some sort of control the banking regulator applying to keep the exchange rate in check through using the direction.
After series of in-person and virtual parleys in Dhaka and Washington, DC, over breaking the deadlock over release of the two tranches worth $650 million each, the central bank is likely to change or discard the circular regarding buying-selling margin in dollar-taka exchange.
Seeking anonymity, a BB official says the stalemate over getting the stalled IMF funds has broken as the central bank has managed to convince the multilateral lending agency for welcoming a more flexible exchange rate in the days ahead.
Regarding the buying-selling spread, the central bank has said the regulator might make some changes in the instruction or discard it altogether.
"It will be known very soon. But the good part is we're going to get the stalled $1.30 billion (fourth and fifth tranches combined) fund of the IMF by next month when its board meeting is scheduled to take place," the official told the FE.
Regarding the positive developments under the lending package for stabilising the country's macroeconomic situation, the central bank is likely to hold a press conference tomorrow (Wednesday) to share everything over the IMF-fund conundrum with reporters.
A number of BB officials have confirmed about the possible press meet but they have not known the topic of the press conference yet.
Economists and money-market analysts have been suggesting the regulator to convince the IMF by meeting their conditions as suspension of the IMF credit will have multidimensional negative impacts on the economy.
They fear that halting IMF lending programme will have spillover impact reaching other development partners like the Asian Development Bank and the World Bank while global rating agencies could further downgrade Bangladesh, which would send negative message to the global investors.
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