Monday, 20 May, 2024
The International Monetary Fund has reminded Bangladesh of the importance of a market-based taka-dollar exchange rate once again.
Krishna Srinivasan, IMF director of the Asia and Pacific Department, said at a press conference on Tuesday that Bangladesh’s economy will get positive results from a flexible exchange rate.
Srinivasan said such a rate would help Bangladesh cut the financial account deficit, which stood at $8.36 billion in the first eight months of the current fiscal year, or four times higher than what it was in the same period last fiscal year.
Bangladesh’s current account balance returned to the positive trend, with $4.76 billion surplus as of the end of February.
The IMF organised the press conference to discuss its just-released Regional Economic Outlook for Asia and Pacific.
Growth in Bangladesh is projected to slow mildly to 5.7 percent this year from 6 percent in 2023, reflecting a tighter policy stance, according to the report.
In his opening remarks, Srinivasan said Asian countries, which include Bangladesh, are well placed than before to cope with exchange rate movements – fewer financial frictions and better macro-fundamentals and institutional frameworks.
They should continue to allow the exchange rate to act as a buffer against shocks, he said.
He also said Asian central banks should continue to focus firmly on domestic price stability and avoid making policy decisions overly dependent on anticipated interest rate moves by the Federal Reserve.
Bangladesh has been taking a slew of reformative measures following the IMF’s suggestions under a $4.7 billion loan programme since the beginning of 2022 after applying for the credit amid depleting dollar reserves.
The country has received the first two tranches of the loan and an IMF team is visiting Bangladesh to discuss the targets about the third trache.
A market-based exchange rate is among the conditions set in the loan programme.
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The International Monetary Fund has reminded Bangladesh of the importance of a market-based taka-dollar exchange rate once again.
Krishna Srinivasan, IMF director of the Asia and Pacific Department, said at a press conference on Tuesday that Bangladesh’s economy will get positive results from a flexible exchange rate.
Srinivasan said such a rate would help Bangladesh cut the financial account deficit, which stood at $8.36 billion in the first eight months of the current fiscal year, or four times higher than what it was in the same period last fiscal year.
Bangladesh’s current account balance returned to the positive trend, with $4.76 billion surplus as of the end of February.
The IMF organised the press conference to discuss its just-released Regional Economic Outlook for Asia and Pacific.
Growth in Bangladesh is projected to slow mildly to 5.7 percent this year from 6 percent in 2023, reflecting a tighter policy stance, according to the report.
In his opening remarks, Srinivasan said Asian countries, which include Bangladesh, are well placed than before to cope with exchange rate movements – fewer financial frictions and better macro-fundamentals and institutional frameworks.
They should continue to allow the exchange rate to act as a buffer against shocks, he said.
He also said Asian central banks should continue to focus firmly on domestic price stability and avoid making policy decisions overly dependent on anticipated interest rate moves by the Federal Reserve.
Bangladesh has been taking a slew of reformative measures following the IMF’s suggestions under a $4.7 billion loan programme since the beginning of 2022 after applying for the credit amid depleting dollar reserves.
The country has received the first two tranches of the loan and an IMF team is visiting Bangladesh to discuss the targets about the third trache.
A market-based exchange rate is among the conditions set in the loan programme.
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