Bangladesh finally meets the IMF-set net international reserves (NIR) mark for the country's creditworthiness, days before the deadline expired, as the central bank adopted a waste-not, want-not strategy to boost dollar stock.
As part of the lending package for stabilising the country's macroeconomic condition, the Washington-based multilateral lender had given the country a target to maintain $20.11 billion worth of NIR by the end of June this year. But, after the latest review mission in Dhaka, the IMF bent the NIR threshold for the central bank to have $14.78 billion in reserve, sources at the Bangladesh Bank said.
According to latest BB data, the NIR counted around $15.80 billion as on June 27, 2024, which is basically $1.0 billion higher than the IMF mark.
Even after the first week of the just-past month of June, the NIR was below $13.0 billion that became a matter of serious concern for the banking regulator ahead of getting the third tranche of $4.70-billion loan from the International Monetary Fund.
To get to the NIR goal, the central bank took a strategy focused more on independent model-driven forex-saving steps alongside dependence on model to bag foreign currencies from multilateral lending agencies, the sources said.
"And the strategy works properly, which is reflected in the recent jump of forex-stock," says a central banker, on condition of not naming him.
As part of the independent modus operandi, the BB focused largely on getting more earnings from remittance and exports through taking various steps for the last couple of months to bring stability in the foreign-exchange reserves.
"Now look at the current remittance data, which is very encouraging. Now around $100 million comes a day from the remitters," says the central banker about the forex-boosting bets.
On the other hand, the official notes, the central bank becomes very careful in selling the US dollar to the commercial banks in order to save forex while a significant portion of the EDF or export development fund has been realised in recent times.
And this two-pronged strategy of boosting incomings and tightfisted outgoings of the greenback helps raise the dollar stock.
"We adopt the strategy so that the central bank does not largely depend on the global lending agencies for stabilising the forex stock in the coming years," the central banker says.
Another BB official, also preferring anonymity, said the central bank failed twice in meeting the NIR target in the past under the lending package. "If it fails again, the question over credibility of the central bank might arise that we did not face at all."
Alongside taking measures to raise inflow of dollars through remittance, export and FDI, the BB official said, they intensified their moves to bring funds from multilateral agencies like the World Bank, the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB).
The country received more than $2.0 billion from the development partners, including $500 million from the World Bank, $400 million from the AIIB and $100 million Korea in this drive.
Simultaneously, the central banker said, the country received the third tranche amounting to $1.15 billion from the IMF very recently from the lending package. "Now, the NIR is more than $1.0 billion higher from the IMF-set target by just-passed June."
In January last year, Bangladesh signed the $4.7-billion loan agreement with the IMF in the wake of dwindling foreign-exchange reserves. The loan is being distributed in seven instalments stretching up to 2026. The lender cleared $447.8 million worth of the first instalment in February last year, and $681 million of the second instalment in December.
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