BB counts reserves with EDF, Climate Fund

The Bangladesh Bank has calculated its Foreign Exchange Reserve including the Export Development Fund and Climate Fund but the International Monetary Fund dissents from the central bank approach.

According to a BB high-up, the IMF does not want to accept the forex figure; it wants the central bank exclude the EDF, Climate Fund and other non-reserve assets from its calculation of reserves.

Bangladesh Bank Executive Director and Spokesperson Md Serajul Islam told The Business Post that the IMF did not want to accept the way forex reserve was quantified.

“We gave our account of reserve calculation to the IMF that is reviewing our explanation,” he added.

At the end of June this year, foreign exchange reserve stood at $46 billion as per the central bank data while the IMF said the reserve would be $39 billion.

According to the global lender, a portion of reserve has been used to lend to Sri Lanka as per the decisions of the central bank board.

Zahid Hussain, former lead economist, World Bank, Dhaka office, said this is not logical to consider EDF as forex reserve because EDF cannot be taken out for immediate needs. The forex reserves are liquid assets.

Above $6 billion fund as EDF, Climate Fund and other non-reserve assets have been incorporated in the foreign exchange reserves of Bangladesh.

Zahid observed that the central bank has lent to Sri Lanka $250 million, which has also been shown as reserves.

However, there is no chance to consider it as reserves since the lending amount cannot be termed liquid assets, the economist pointed out.