NIR still below IMF-set target

Central bankers appear busy holding talks with the International Monetary Fund (IMF) for getting the third tranche of US$1.15 billion from its lending package as Bangladesh couldn't yet manage conditional reserves position.
A prime condition binding the borrowed fund release is maintaining net international reserves or NIR at a minimum of $14.77 billion by this June.
Because of the shortfall, sources say, the multilateral lending agency keeps meeting virtually regularly with the Bangladeshi officials concerned and pressuring them to meet the target within the timeline as the Bretton Woods Institution is set to hold board meeting on June 24 where the third installment of the $4.70-billion loan will be placed for approval.
Ministry of Finance sources say Bangladesh meets all of the IMF-set conditions save two - NIR and enhancing the revenue targets.
"But the NIR issue becomes a concern for them, which is still far off the target," said an official at the ministry, seeking anonymity.
He adds: the IMF's virtual meeting is taking place almost every day with officials at the central bank where the issue figures high.
The ministry sources said the NIR now stood below $13.0 billion but the country needed to take it to $14.77 billion this June. It means arranging around $2.0 billion in less than three weeks which will be "a challenging task for the country" in this crunch time.
On anonymity, a central banker said meeting the NIR target would not be a serious concern as more than $2.0 billion is expected to be coming from other foreign sources like the World Bank, the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) within this month.
On the other hand, the country is receiving more than $100 million a day from the remitters ahead of Eid-ul-Azha. "So, there is no worry about the NIR."
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 of NIR at the end of June this year. But, after the latest review mission in Dhaka, the IMF lowered the NIR threshold for the central bank to $14.76 billion, according to a document of the IMF.
This is yet another relaxation on the NIR since the lender approved the loan for Bangladesh in January 2023 to tackle its economic challenges stemming from the global economic crisis and other factors.
Bangladesh Bank could not get to the NIR goal, until June 2023, set by the IMF after its first review. It also failed to hit the mark set for until December 2023.
In January last year, Bangladesh signed the $4.7-billion loan agreement with the IMF due to dwindling foreign-exchange reserves. The loan is being distributed in seven installments by 2026. The lender cleared $447.8 million worth of the first installment in February last year, and $681 million of the second installment in December.
Despite lowering the target of net reserves in the new staff-level agreement, the lender has not reduced the revenue-collection goal.

[email protected]