Bangladesh Bank today explained to the International Monetary Fund (IMF) the reasons behind the failure to meet the target on foreign currency reserves, one of the six conditions set by the global lender for its $4.7 billion loan programme.

The central bank governor came up with the explanations during a meeting with the IMF mission at the Bangladesh Bank headquarters in Dhaka's Motijheel area, according to BB Executive Director and Spokesman Md Mezbaul Haque.

The BB informed that Bangladesh has successfully reduced the current account balance deficit, but there was a big deficit in the financial account, the major reason for the decline in reserves, Haque said.

Bangladesh has failed to meet two of the six quantitative targets: a minimum net international reserves of $24.46 billion as of June 30 and a minimum tax collection of Tk 345,630 crore in fiscal year 2022-23.

The IMF delegation led by Rahul Anand, mission chief for the Bangladesh, Asia and Pacific department, held its first review meeting with the governor and top officials of the BB. They will also hold a series of meetings with other stakeholders to review the performance in achieving the targets set for the first half of 2023.

Briefing media after the meeting, Haque said they have initiated reform measures which were supposed to be done. "But we have a couple of failures. We couldn't stick to the reserve limit and the target of tax collection was not fulfilled."

He said the BB highlighted the achievements and progress made in other sectors as per the requirements of the IMF.

Haque also said the IMF team will assess the overall condition of the economy before sitting with the central bank again and share the outcomes of the meetings.

"We could get the final feedback in the concluding meeting scheduled for October 19."

Had the government met all six conditions, the second tranche of the $4.7 billion would have been released by November, a finance ministry source said.

Now the matter will go to the IMF board, which will consider whether the explanations given by the government for the inability to meet the two conditions are rational or not.

If the board is satisfied, the second instalment of about $448 million will be approved.