During a meeting with Bangladesh Bank officials last week, the IMF highlighted the need to maintain a contractionary monetary policy to reduce inflation to 5 percent.
Bangladesh’s economy still faces significant pressure, the IMF said, and it recommended the country’s central bank make the interest rate structure more market-oriented. He highlighted the need to maintain a contractionary monetary policy to reduce inflation to 5 percent. He is concerned about the use of foreign reserves to form the Export Development Fund and the increasing volume of non-performing loans.
He also expressed concern over the use of foreign reserves in the formation of the Export Development Fund (EDF) and the increasing volume of non-performing loans (NPL).
Although loan conditions call for reducing bad loans at state banks below 10 percent, the figure has reportedly surpassed 40 percent. Private banks also saw their non-performing loan ratio exceed 10 percent, double the stipulated limit of 5 percent.
Under the IMF’s $4.7 billion lending program, Bangladesh has yet to fully achieve its inflation control target.
The central bank informed the visiting IMF delegation that headline inflation had fallen to 8.36 percent in September.
The IMF sought clarification on how the central bank plans to maintain investment momentum if contractionary policy continues for an extended period, according to national media reports.
The delegation strongly opposed the bank’s practice of providing unsecured liquidity support to weak banks under its “lender of last resort” policy.
He was satisfied with the current level of Bangladesh’s foreign exchange reserves.
The IMF mission will remain in Dhaka until November 13.
Fiber2Fashion News Desk (DS)
