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A visiting IMF mission recommends acceleration in raising Bangladesh's net forex reserves to meet the mark set in its $4.70-billion lending package for stabilising macroeconomic situation, as further fund support is sought for current reforms.
In a series of stocktaking consultations with Bangladesh Bank (BB) and finance officials Tuesday, the representatives of the Bretton Woods Institution observed that the country needed to maintain foreign-exchange reserves equivalent to 3.50 months' import expenses to achieve the goal (reserves at $24 billion by end of June 2026).
"But the country now manages reserve which is equivalent to maintaining 3.10 months of import payments. With that pace, Bangladesh would not be able to reach the goal," BB spokesperson Husne Ara Shikha told the reporters quoting the IMF members.
In response, she said, BB governor Dr Ahsan H. Mansur said the central bank took the NIR goal as a challenge and assured them of taking all possible measures in reaching the goal by end of the lending package (June 2024).
Seeking anonymity, a BB official who attended the meeting said the governor informed the IMF representatives that the central bank had already taken various steps to improve the reserve situation-like not selling forex from the reserves to the forex-strapped banks to settle their overseas payments.
Regarding the liabilities of government imports, he said the central bank is assisting the public banks in dealing with government imports to clear overdue payments with the foreign currencies sourced from the interbank forex platform.
"Our plan is to clear all the overdue government import payments as quickly as possible," the BB official quoted the governor as having told the IMF team.
About the net international reserves (NIR) target, the central banker said the country now stays over the periodical NIR target for this September. "That's what I can say right at the moment."
According to the IMF, Bangladesh needs to maintain NIR equivalent to $14.90 billion by the end of September 2024. According to the BB sources, the country's NIR position stands near $16-billion mark.
The meeting sources also said the IMF team raised question over proper functioning of the crawling peg-driven exchange-rate mechanism to bring stability in the forex market.
They commented that the central bank either pursue moral suasion or other mechanism to keep the exchange rate fixed to some extent instead of letting them crawl and wanted to know the feedback from the banking regulator.
In reply, the BB governor informed them that the forex market became stable now and sought 2-3 months time to observe the movements of exchange rate.
Meanwhile, Bangladesh's interim government, spearheading comprehensive politico-economic reforms, sought support from the International Monetary Fund to implement its reform agenda, particularly in banking-financial sector.
Also, IMF assistance has been sought for repatriating a cache of laundered money, Finance Adviser Dr Salehuddin Ahmed said Tuesday after consultation with a visiting Fund mission.
"We need resources to conduct reforms. We do reform on our own while we need foreign supports as well in some cases," he told newsmen after the IMF delegation held as meeting with him at his Bangladesh secretariat office.
Mission chief of the Washington-headquartered Fund for Bangladesh Chris Papageorgiou led the delegation at the meeting, a part of their tasks to assess the country's macroeconomic situation and additional financial needs amid the changed political situation.
Mr Ahmed notes that the IMF is one of the development partners which provide supports for maintaining balance of payments-a major parameter of a country's economic health.
"We discussed with them what additional support we needed other than the ongoing loan programme. We informed them what measures we have taken for reforms in the banking and revenue sectors," he said.
Replying to a query, the finance adviser said he sought technical assistance for reform in banking sector, tax reforms, and repatriation of laundered money from abroad.