Staff Correspondent

Despite relaxed conditions for net reserves by the International Monetary Fund (IMF), Bangladesh could not meet the foreign exchange reserves target at the end of 2023.

According to the IMF loan documents, the actual reserves were supposed to be $17.78 billion at the end of December 2023. However, as the year ended, the actual reserves stood at about $16.75 billion.

The Bangladesh Bank could not meet the reserves target as per the IMF conditions by September-end as well. Later, the global lender reduced the reserves conservation target at the request of Bangladesh. Even the revised target could not be achieved by the end of December 2023.

According to the IMF's new conditions, the real reserves are expected to be $19.26 billion in March and $20.10 billion in June 2024. However, financial sector stakeholders cannot determine whether this goal will be achieved.

The real reserves are calculated after excluding the SDR of the IMF, the dollars kept as foreign exchange clearing by the banks, and the dollars deposited for the Asian Clearing Union (ACU) bills.

Apart from this, there are two other accounts of reserves. One of those is total reserves. Another IMF accounting system is reserves maintained under BPM6.

At the end of the year 2023, total forex reserves increased to $27 billion. However, what the IMF considers is only net or real reserves.

Md Mezbaul Haque, spokesperson and executive director of the Bangladesh Bank, told UNB that the central bank worked to keep the reserves above $17 billion, as per the IMF-set target.

Former IMF economist Dr Ahsan H Mansur told UNB that it was unexpected that the IMF-set target could not be met even after reducing the previous target.

He also doubted whether the Bangladesh Bank would be able to maintain the IMF’s foreign exchange reserves target in March 2024, if the central bank does not change its policies.