Home ›› 18 Jul 2022 ›› Front
The visiting International Monetary Fund (IMF) team on Sunday inquired and learned about Bangladesh’s current macroeconomic situation, the status of the banking system, default loans, and action plan for post-LDC graduation and export boost.
The team is in Dhaka to discuss a $4.5 billion bailout package Bangladesh has sought from the multilateral lender to shore up its fragile foreign exchange reserves.
The team of senior agency officials led by Rahul Anand, division chief in the IMF’s Asia and Pacific Department, held separate meetings with Finance Division Senior Secretary Fatima Yasmin, Commerce Ministry Senior Secretary Tapan Kanti Ghosh and Financial Institutions Division Secretary Sheikh Mohammad Salim Ullah at their offices in the capital.
Salim told The Business Post that the IMF delegation sought to know about various aspects of the financial sector including the economic condition, current banking system and weaknesses.
“We highlighted the current status of the banking sector and the steps taken to reform this sector,” he added.
A senior Finance Ministry official said they briefed the IMF team about the steps on implementation of reforms in state-owned commercial banks, reducing non-performing loans, developing capital markets, especially for the domestic debt market, and improving monetary, fiscal and financial governance.
IMF delegation was also briefed about the measures taken for modernising the monetary policy framework, improving fiscal frameworks and reducing fiscal risks, creating fiscal space for growth-enhancing and inclusive spending, reducing financial vulnerabilities by recognising problems, strengthening supervision and enhancing regulation, enhancing the quality of data and carrying out reforms related to reducing climate-related vulnerabilities.
At the meeting with Commerce Ministry officials, the IMF team asked about Bangladesh’s preparedness for the country’s graduation to a developing nation in 2026.
The commerce secretary said they were working on product and market diversification. In particular, efforts are being made to expand the market in various countries, including Argentina and Brazil.
Besides, he told the IMF team that discussions are going on to sign Free Trade Agreements and Preferential Trade Agreements with different countries to remove export barriers after LDC graduation.
The IMF team will sit with the National Board of Revenue (NBR) officials on Monday to discuss the country’s need for technical assistance on capacity development in tax-revenue mobilisation, among other issues.
The IMF delegation arrived in Dhaka on Thursday. The meetings will continue until July 21. They will also hold separate talks with the officials of Bangladesh Bank (BB) and the Economic Relations Division (ERD).
Last month, BB Governor Abdur Rouf Talukder held a virtual discussion with IMF’s Resident Representative for Bangladesh Jayendu De, seeking the proposed $4.5 billion bailout scheme in the form of budgetary support.
Top Finance Division officials said they expect the deal to be finalised by September.
The request for budgetary support comes to prop up the dwindling foreign currency reserves, which stood at $39.8 billion until last week. The reserve could cover only about five months of the country’s import bills.
IMF officials will look into the impacts of the Russia-Ukraine war and escalating global commodity prices on the Bangladesh economy, the status of recovery from the Covid-19 pandemic and the government’s large subsidy programmes.
The Washington-based global lender could tie in conditions for the bailout package. The conditions could include measures to increase revenue, lower subsidy expenditure, market-based exchange rate and lending rate, and reforms in the banking sector and tax administration, Finance Ministry officials said.
