IMF team meets with ACC
Staff Reporter :
A four member of visiting International Monetary Fund (IMF) delegation met with the Anti-Corruption Commission (ACC) on Thursday.
The meeting took place at ACCheadquarters at Segun Bagicha in the capital.
IMF mission chief in Bangladesh Rahul Ananda led the team while Md Mukammel Hoque, Director General (Money Laundering) was head of the ACCteam.
The IMF delegation has been visiting Bangladesh as part of its review initiated since October 4 on whether Bangladesh met conditions on its $4.7 billion loan.
IMF has imposed few conditions like economic stability to get second installment. They also talked on the issues of reducing corruption in various sectors in the country.
The delegation, which is in Bangladesh on a two-week visit, will review the performance in achieving the targets set for the first half of 2023.
Before that the IMF team met Bangladesh Bank (BB) and National Board of Revenue (NBR) officials to review the fulfillment of the conditions.
The team suggested that the central bank officials take policy measures for the rates to be determined by the free market.
In response, the central bank officials said the new lending interest rate formula was almost market-driven.
Bangladesh Bank in June this year withdrew the lending rate cap at 9% which was introduced in April 2020, as it was one of the IMF loan conditions.
As per the Bangladesh Bank’s new interest rate formula, banks can impose a 3% margin on the six-month moving average rate of treasury bills, or Smart.
The Smart was 7.20% in September and it will be applicable for October, up from 7.14% in August.
As a result, the highest lending rate would be at 10.20% for October and in effect this is also an interest cap, the IMF mission explained to the Bangladesh Bank officials.
On the other hand, the central bank announced a new monetary policy in June, declaring to implement a unified and market-driven single exchange rate regime.
This will enable the open market to determine the exchange rate between the Taka and the US dollar or any other foreign currency.
After that, the Association of Bankers, Bangladesh (ABB), a platform of CEOs of lenders in the country, and Bangladesh Foreign Exchange Dealers Association (Bafeda) on August 31 fixed a single exchange rate.
The two bodies had been continually devaluing the local currency against the US dollar since last year as per unofficial directions of the central bank.
In response to the IMF delegation, the Bangladesh Bank officials informed that if the exchange rate was totally left to the whims of the open market, it would spiral out of control, bringing about negative implications on the rest of the economy.
Furthermore, it will be difficult to bring it down later and that is why the Bafeda and ABB are devaluing the Taka in phases, they said.
The delegation also wanted to know the definition of loan classification and the situation regarding classified loans, said the Bangladesh Bank officials.
