Bangladesh's forex stands at $17.20 bn, short of IMF's relaxed target

Bangladesh's foreign exchange reserves stood at USD 17.20 billion at the end of December 2023, falling short of the relaxed target of a minimum of USD 17.78 billion set by the IMF, according to media reports here on Wednesday.

The International Monetary Fund (IMF) approved a USD 4.7 billion loan for Bangladesh in January last year and fixed a minimum Forex Reserve, also called the Net International Reserve (NIR) of USD 26.81 billion by December 2023 end. However, that target was later relaxed to USD 17.78 billion, USD 19.27 billion for March and USD 20.11 billion for June, The Daily Star newspaper reported quoting the IMF document.

We set a target to keep an NIR of more than USD 17 billion till December 31 and we fulfilled the goal because the NIR stood at USD 17.20 billion on Sunday (December 31), the daily quoted Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque as saying.

Our net reserve is close to the IMF target and this is not mandatory to fulfill the goal, Haque added.

Pointing out that the forex reserve increased in December 2023 compared to November 2023, an economist said, Bangladesh would have to maintain the momentum in the coming months to secure the remaining instalments from the IMF.

Leading Bengali daily, Prothom Alo, quoted sources at the Bangladesh Bank and reported an even lesser NIR of USD 16.75 billion and said, Prior to the December shortfall, the Bangladesh Bank had also faced a failure in September. Subsequently, the IMF revised the amount following a request from the Bangladesh side. However, the authorities were unable to retain that reduced amount at the end of December as well.

Referring to the January 7 general elections, the daily further reported that the Bangladesh side informed the IMF that meeting the targets of reserve and tax revenue will be possible after the parliamentary elections, which, it said, prompted the global lender to relax the loan conditions.

The Dhaka Tribune newspaper said, Even though most of the country's banks are in a dollar crunch, Bangladesh Bank has collected dollars from various banks to maintain reserves as per IMF conditions.

In addition to import control, Bangladesh Bank has succeeded in preserving reserves as a result of multi-faceted activities to encourage a sending of remittances through banking channels, continued growth of export income, and quick loan disbursement from the IMF, it said even as it maintained that the IMF target was USD 17.48, which the country's central bank exceeded.

Bangladesh had received the second instalment from the IMF in October 2023 after it had met all but two conditions set by the Washington-based lender, the Dhaka Tribune said, adding, that during a review meeting then, the IMF team had found that Bangladesh had not achieved the reserve and revenue collection targets.