The International Monetary Fund (IMF) has announced that The IMF staff and Bangladeshi authorities have achieved a staff-level agreement to finalize the first review of the IMF-supported program. Mr. Rahul Anand, leading a team from the IMF, visited Dhaka to engage in discussions about economic and financial policies according to a press release by the IMF.
According to the IMF, Mr. Rahul Anand expressed gratitude to the Bangladesh authorities and other stakeholders for their hospitality and candid discussions.
To achieve short-term macroeconomic stability, the IMF outlines that a combination of monetary tightening, supported by neutral fiscal policies and more flexible exchange rates, is essential. The IMF program remains committed to assisting the authorities in upholding macroeconomic stability and safeguarding vulnerable populations, all while advancing economic reforms and addressing climate concerns. In the context of the Article IV policy consultation, the emphasis was on implementing reforms to generate additional fiscal resources for social and developmental purposes, modernizing policy frameworks, improving governance, and reinforcing climate resilience according to a press release by IMF.
During the discussions for the 2023 Article IV consultation, the Bangladesh authorities and IMF staff reached a staff-level agreement on the policies needed to complete the first review under the ECF/EFF/RSF arrangements. The staff-level agreement is subject to IMF Management approval and Executive Board endorsement, which is expected in the coming weeks. Completion of the first review will make available about US$ 462 million (SDR352.35 million equivalent of 33 percent of quota) under the ECF/EFF and about US$ 219 million (SDR166.67 million equivalent of 15.8 percent of quota) under the RSF, according to Mr. Rahul Anand.
Addressing banking sector vulnerabilities remains important to meet Bangladesh's growing financing needs. Reducing non-performing loans of state-owned commercial banks, enhancing supervision, strengthening governance, and improving regulatory frameworks would increase financial sector efficiency. Developing domestic capital markets will help mobilize financing to support growth objectives, added Mr. Rahul Anand.