Economy

Reserves fall short of IMF target

The NIR (Net International Reserves) stood at $17.20 billion at the end of the year, meaning the country has missed the target by $58 million, figures from the central bank showed.
IMF Loan to Bangladesh: IMF recommends calibrated monetary tightening, exchange rate flexibility

Bangladesh has failed to meet the International Monetary Fund's target on keeping $17.78 billion as the minimum net international reserve as of December 31 last year.

The NIR (Net International Reserves)  stood at $17.20 billion at the end of the year, meaning the country has missed the target by $58 million, figures from the central bank showed.

"We set a target to keep an NIR of more than $17 billion till December 31 and we fulfilled the goal because the NIR stood at $17.20 billion on Sunday," said Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque.

"Our net reserve is close to the IMF target and this is not mandatory to fulfill the goal."

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said it would have been better if the government had met the target.

"But it was good to see that that they tried to raise the reserve level."

The economist said the forex reserve increased in December compared to November and Bangladesh would have to maintain the momentum in the coming months to secure the rest instalments from the IMF.

As per the IMF manual, the gross international reserves stood at $21.82 billion on Sunday.

When the Washington-based lender approved the $4.7 billion loan for Bangladesh in January last year, it had fixed a minimum NIR of $26.81 billion for December. Later, the goal was revised downwards since the reserve level dropped at a faster-than-expected pace.

In December, the IMF reset the NIR at $17.78 billion for December, $19.27 billion for March this year and $20.11 billion for June, as per IMF documents.

The revision comes as the government could not meet two of the six targets that it had to reach in order to qualify for the second instalment under the loan programme. The two targets are related to the reserves and revenue collections. Still, the IMF released the installment.

In order to hit the goal and boost the reserve level, the BB has started to buy US dollars from commercial banks. It purchased $1.04 billion in recent times, which included the $200 million bought from the crisis-hit Islami Bank last week, said central bank officials.

At the same time, the regulator continues to pump US dollars into banks from its reserves. Between July and December, the BB sold $6.7 billion to banks, central bank data showed.

The banking regulator sold more than $13 billion in the past two years, piling up pressure on the reserves.

Banks, especially the state-run lenders, are taking the dollar support to settle import payments of Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation, and Bangladesh Chemical Industries Corporation, among other government agencies.

The next review of the 42-month IMF programme will take place in May when Bangladesh is expected to receive the third installment.

Comments

Reserves fall short of IMF target

The NIR (Net International Reserves) stood at $17.20 billion at the end of the year, meaning the country has missed the target by $58 million, figures from the central bank showed.
IMF Loan to Bangladesh: IMF recommends calibrated monetary tightening, exchange rate flexibility

Bangladesh has failed to meet the International Monetary Fund's target on keeping $17.78 billion as the minimum net international reserve as of December 31 last year.

The NIR (Net International Reserves)  stood at $17.20 billion at the end of the year, meaning the country has missed the target by $58 million, figures from the central bank showed.

"We set a target to keep an NIR of more than $17 billion till December 31 and we fulfilled the goal because the NIR stood at $17.20 billion on Sunday," said Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque.

"Our net reserve is close to the IMF target and this is not mandatory to fulfill the goal."

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said it would have been better if the government had met the target.

"But it was good to see that that they tried to raise the reserve level."

The economist said the forex reserve increased in December compared to November and Bangladesh would have to maintain the momentum in the coming months to secure the rest instalments from the IMF.

As per the IMF manual, the gross international reserves stood at $21.82 billion on Sunday.

When the Washington-based lender approved the $4.7 billion loan for Bangladesh in January last year, it had fixed a minimum NIR of $26.81 billion for December. Later, the goal was revised downwards since the reserve level dropped at a faster-than-expected pace.

In December, the IMF reset the NIR at $17.78 billion for December, $19.27 billion for March this year and $20.11 billion for June, as per IMF documents.

The revision comes as the government could not meet two of the six targets that it had to reach in order to qualify for the second instalment under the loan programme. The two targets are related to the reserves and revenue collections. Still, the IMF released the installment.

In order to hit the goal and boost the reserve level, the BB has started to buy US dollars from commercial banks. It purchased $1.04 billion in recent times, which included the $200 million bought from the crisis-hit Islami Bank last week, said central bank officials.

At the same time, the regulator continues to pump US dollars into banks from its reserves. Between July and December, the BB sold $6.7 billion to banks, central bank data showed.

The banking regulator sold more than $13 billion in the past two years, piling up pressure on the reserves.

Banks, especially the state-run lenders, are taking the dollar support to settle import payments of Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation, and Bangladesh Chemical Industries Corporation, among other government agencies.

The next review of the 42-month IMF programme will take place in May when Bangladesh is expected to receive the third installment.

Comments