IMF on stricter stance on reserves

No benefit to defaulters

IMF has asked to know about the steps taken by the central bank to disclose complete information on defaulted loans, not giving any benefits to defaulters and prevent money laundering

Mahfuja Mukul: International Monetary Fund (IMF) worried by failure to meet reserve targets. Bangladesh Bank is not able to stop the loss of foreign currency reserves of the country by any action. In this case, the IMF has blamed various wrong policies of the central bank for the failure to hold reserves. At the same time, the organization has asked for a specific action plan to meet the target of the reserve before the end of the mission. Besides, the IMF has asked to know about the steps taken by the central bank to disclose complete information on defaulted loans, not giving any benefits to defaulters and prevent money laundering.
The IMF delegation visiting Dhaka asked for this information in a meeting with Bangladesh Bank Governor on Monday. Bangladesh Financial Intelligence Unit (BFIU) chief Masud Biswas, four deputy governors, spokespersons and executive directors of various departments were present at the time. Several senior officials of Bangladesh Bank confirmed the matter.
According to the sources of the meeting, the IMF blamed various wrong policies of the central bank for the failure to retain reserves. At the same time, the international donor organization has asked for a written statement on why the target of the reserve is not being met and what additional steps can be taken to meet the target. In this case, before the next meeting (May 8), the action plan should be submitted to Bangladesh Bank. According to Bangladesh Bank’s data review, gross reserves were $25.32 billion on Monday. It is $19.97 billion according to BPM-6 in IMF advice. This, however, is not a real reserve. And to get the actual expendable reserves, $5.90 billion as current liabilities due to accrual bills, foreign debt, project arrears and Special Supplementary Currency (SDR) arrears have to be deducted from the BPM manual. Accordingly, expendable reserves stand at $14.07 billion. According to Bangladesh Bank data, the average import expenditure in January, February and March was $5.87 billion, $5.20 billion and $5.10 billion respectively.
Even in the month of March of the current calendar year, Bangladesh could not achieve the actual reserve conservation target. Actual reserves at the end of March were supposed to be $19.26 billion, but were actually around $15 billion. In June last year, the target was $23.7 billion, but the net reserve was $19.5 billion.
Also, the IMF has asked whether there is any loophole in the disclosure of data on defaulted loans. At the same time, the company also wanted to know whether the retention, rescheduling and foreclosure in cases are being presented to the customers as bad assets of the bank. Besides, the organization has also been asked to inform whether Bangladesh Bank is providing any facility to the defaulters for recovery of defaulted loans. If any leniency is shown towards the defaulters, it is also said to return from it. However, the IMF has not commented on the policy made by the central bank on rescheduling and rescheduling recently. Besides, the organization has asked for complete information about the amount of money that has been smuggled out of the country. In addition, the organization called for information on the progress of the Central Bank’s measures to prevent money laundering and stricter measures to prevent money laundering.
The visiting team of IMF in Dhaka held 3 rounds of meetings with Bangladesh Bank regarding their mid-term visit. Besides, policy advisor Abu Farah Nasser on bank merger policy. Had a bilateral meeting with Nasser. In addition to the issue of Bangladesh Bank in various meetings, the central bank governor Abdur Rauf Talukdar signed the agreement to reduce the deficit due to the high revenue deficit.
Several senior officials of Bangladesh Bank told Daily Industry that the IMF has asked Bangladesh Bank for information on many issues including currency market management, reserves, defaulted loans. However, they are concerned about the continued depletion of reserves. In that case, they also wanted to know what new steps can be taken to prevent erosion. However, a senior official of the central bank believes that this will not be a hindrance to the loan installment waiver. He said, we believe that the IMF will review the reserve target again.
In this regard, Bangladesh Bank Executive Director and Spokesperson Majbaul Haque said that the IMF team discussed the current status of reserves, exchange rate and smart rate. The IMF has recommended conducting a study on the impact of climate change, particularly on the financial sector. At the same time, they asked to create a module for investment in the climate sector.