Bangladesh makes progress in reform implementation: IMF
The International Monetary Fund (IMF) has observed that Bangladesh is making progress in implementation of its reform recommendations.
"In January, the IMF approved a $4.7 billion loan for Bangladesh, and the country has already received the initial disbursement. The first review of the program will take place in the Fall of 2023, when the IMF staff team will assess the program's quantitative targets and progress of reform implementation... As of now, Bangladesh is making progress as per IMF recommendations," said IMF Director for the Asia and Pacific Department (APD) Krishna Srinivasan.
In an interview with BSS, Krishna said Bangladesh is taking steps to meet programme objectives, including rationalising subsidies, cost recovery of energy prices, moving toward a unified market-determined exchange rate, as well as strengthening the monetary policy framework. Further, increasing exchange rate flexibility and strengthening the forex reserve management framework will enhance external resilience.
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He, however, said Bangladesh needs a more efficient financial sector to improve credit allocation to the most productive economic sectors.
"Efficient financial resource allocation with an effective banking sector would help accelerate the recovery and restore the robust growth momentum. Addressing financial sector vulnerabilities, particularly NPLs in state-owned commercial banks (SOCBs), and to increase private sector credit allocation remain a priority," he added.
He prioritised strengthening corporate governance of banks, including the role of independent directors.
"Classification and provisioning requirements should be in line with Basel standards, including the treatment of rescheduled and non-performing loans," he added.
He said Bangladesh Bank should strictly enforce the current prudential framework. "Legal features that allow delayed loan repayment should be addressed, and legal measures should be instituted to support stronger enforcement of creditor rights and debtor incentives to repay," he added.
He said developing further the bond markets should also be a priority to meet the growing financing needs. "Further reforming National Savings Certificates system and developing secondary market for government securities will be important," he added.
