BB-IMF meeting ends without agreement on exchange rate flexibility

The Bangladesh Bank concluded its virtual meeting with the International Monetary Fund (IMF) on Monday without securing an agreement on exchange rate flexibility, according to sources familiar with the discussions.

Representing Bangladesh in the talks were Bangladesh Bank Governor Ahsan H Mansur, along with deputy governors Md Habibur Rahman and Md Kabir Ahmed.

Sources indicate that the central bank is planning a follow-up meeting with the IMF after holding further consultations with the government.

"The governor is continuing efforts to persuade the IMF to postpone the introduction of a more flexible exchange rate, particularly in light of the current high rate of inflation," said an official close to the matter, speaking on condition of anonymity.

Despite the lack of consensus, the official described the meeting as having shown signs of progress.

Exchange rate policy remains a key sticking point in ongoing negotiations with the IMF, delaying the release of a further $1.3 billion from the lender’s $4.7 billion support package.

During the recent Spring Meetings of the IMF and World Bank in Washington, Governor Mansur also resisted pressure to move immediately to a fully floating exchange rate.

At present, Bangladesh’s gross foreign currency reserves stand above $21 billion – sufficient to cover around four months’ worth of imports.

However, the IMF focuses on net international reserves (NIR), which exclude certain liabilities, as a benchmark for its programme conditions.

In a recent review mission held in Dhaka, Bangladesh Bank proposed removing the NIR floor to facilitate the creation of the fund.

The IMF has yet to formally respond, but the central bank remains hopeful that an agreement can be reached by June.

Meanwhile, Anisuzzaman Chowdhury, special assistant to the Chief Adviser, warned on Saturday that Bangladesh could withdraw from the IMF loan programme altogether if new conditions are imposed for the release of upcoming instalments.