Staff Reporter :
The Bangladesh Bank (BB) has concluded its latest round of virtual discussions with the International Monetary Fund (IMF) without reaching a consensus on greater exchange rate flexibility, according to sources familiar with the matter.
Bangladesh Bank Governor Ahsan H Mansur, along with Deputy Governors Md. Habibur Rahman and Md. Kabir Ahmed, represented the central bank in the meeting held on Monday evening. Sources confirmed that further discussions will be held with the government before the next round of talks with the IMF.
“The Governor is still trying to persuade the IMF to delay the implementation of a more flexible exchange rate regime, given the current high inflation rate,” an official close to the discussions said on condition of anonymity. “Nonetheless, Bangladesh Bank sees some positive developments in today’s meeting.”
Ahead of the meeting, a senior official had indicated that the release of the next tranche of IMF funding-worth $1.3 billion-was contingent on progress made in the talks. This tranche is part of a $4.7 billion loan package granted to Bangladesh by the IMF.
Despite sustained pressure from the IMF, Governor Mansur continues to resist an immediate move to a fully floating exchange rate. The matter also remained unresolved during recent IMF-World Bank Spring Meetings held in Washington.
Bangladesh’s gross foreign exchange reserves currently stand above $21 billion, sufficient to cover nearly four months of imports. However, the IMF monitors Net International Reserves (NIR), which exclude certain liabilities, as a critical performance benchmark.
During the IMF’s recent review mission in Dhaka, Bangladesh Bank proposed removing the NIR floor requirement to allow greater policy flexibility. While the IMF has yet to formally respond, the central bank is hopeful of reaching an agreement by June.
Officials have cautioned that an abrupt shift to a floating exchange rate could destabilise the market, potentially encouraging dollar hoarding by aggregators and leading to increased exchange rate volatility.
“With inflation already elevated, further currency instability must be avoided,” said one official. “The IMF framework would allow for targeted dollar injections to curb market manipulation.”
Drawing comparisons with regional practices, the official noted that the Reserve Bank of India routinely intervenes in the foreign exchange market to stabilise the rupee during periods of capital flight or trade imbalance.
He also cited a recent example: when the Bangladesh Bank made a direct payment to Qatar for energy imports-bypassing the open market-dollar hoarders were compelled to release their holdings, causing the exchange rate to appreciate by Tk0.50 to Tk0.60.
Meanwhile, Chief Adviser’s Special Assistant Anisuzzaman Chowdhury said on Saturday that Bangladesh may consider withdrawing from the IMF loan programme if additional conditions are imposed for the disbursement of future tranches.
