Reserve to drop at $24 b

IMF system calculation to start in June

Mahfuja Mukul: According to the International Monetary Fund (IMF) conditions, Bangladesh Bank is going to implement the BPM6 method for calculating foreign currency accumulation from next June. The central bank will officially announce the monetary policy for the second half of the year in June. The net account of reserves will be published from July.
At the same time, the central bank will set a benchmark for setting market-based interest rates by removing the cap on interest rates on loans. Commercial banks can fix the loan interest rate by adding 3 or 4 percent to this. In addition, the central bank will create an interest rate corridor for determining various policy interest rates. Based on this, the interest rate will be changed from time to time.
These issues were decided in the Monetary Policy Committee meeting held at the Central Bank on Sunday. Deputy Governor, concerned executive directors and directors were present in the meeting held under the chairmanship of the central bank governor. According to sources, the IMF has given the condition to publish the net account of reserves by next June. The central bank has worked for this purpose. After receiving the first installment, Bangladesh decided to implement the IMF’s accounting system BPM6 to meet the terms of the loan.
The actual account of reserves will be released in July. The central bank is developing a model for this. The matter was discussed in the meeting. If the reserve account is disclosed in this manner, the reserve will be reduced considerably. Currently, the reserve is $31.26 billion. If the money invested in various funds is excluded from this, the reserve will come down to $24 billion. $8 billion were invested in various funds from current reserves. $100 million have already been reduced from that investment. Efforts are underway to reduce further.
It is reported that Bangladesh Bank will publish the data of their own account reserves and IMF’s BPM6 system accounts.
Another condition of the IMF is to lift the ceiling on interest rates on loans. Currently the interest rate is capped at 9 percent. This limit should be removed by next June. The central bank is working on this. The central bank will announce a benchmark interest rate by removing the interest rate cap.
It will be determined based on the average interest rate of various government bonds. Currently, the average interest rate of the 5 major government bonds is 8.5 percent. By adding 3 or 4 percent to the bank, they can set the interest rate separately. Then the interest rate will exceed 11 to 13 percent. There are other types of fees along with it.
Currently, the central bank reviews its own policy by setting policy interest rates. In this regard, the central bank will create an interest rate corridor. Based on which the policy will determine the interest rates such as bank rate (the rate at which the central bank lends to commercial banks), repo rate (interest on repurchasing treasury bills sold by the central bank) and reverse repo rate.
According to sources, this policy of interest rate will change. Interest rates will decrease or increase based on market demand. The central bank is now working on these issues. The central bank will also announce a new policy in this regard at the time of announcing the new monetary policy in July of the next financial year.