Economy
IMF Team Raises Concerns Over Bangladesh as Reserves Decline Further
The International Monetary Fund (IMF) has raised concerns regarding several key aspects of the Bangladesh economy, including inflation, growth, and foreign reserves, as it concluded its mission under the $4.7 billion loan program.
In a press release issued after the conclusion of the staff team visit on May 7, the IMF highlighted persistent inflationary pressures, increased volatility in global financial conditions, and a slowdown in major advanced trading partners as factors weighing on growth, foreign currency reserves, and the local currency, Taka.
The IMF has announced plans to conduct the first review of its Extended Credit Facility, Extended Fund Facility, and Resilience and Sustainability Facility arrangements later this year, according to the press release. Bangladesh is expected to witness a decline in reserves to $29.86 billion, the lowest level in seven years, as import bill payments for two months are due next week.
In April, exports experienced a significant decline of 16.5% to $3.95 billion compared to the previous year, mainly attributed to a slowdown in orders from clothing retailers. Additionally, inward remittances, which contribute to the country’s balance of payments, decreased by 16% year-on-year to $1.68 billion in April.
Bangladesh, during the visit of the IMF team from April 25 to May 7, highlighted plans for a more flexible exchange rate and reforms in banks’ lending rates. Starting in July, banks will be permitted to set their lending rates at a maximum of 3% above the six-month weighted average rates for Treasury bills. This new rate corridor, which replaces the previous 9% cap on lending rates, fulfills a key IMF condition.
In February, Bangladesh received the first installment of IMF loans amounting to $476 million, with the second tranche expected to be disbursed in November. The IMF’s ongoing review and engagement with Bangladesh reflect efforts to address the economic challenges faced by the country and promote sustainable growth in the future.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
