IMF enquires about Bangladesh Bank's move to control inflation

Media reports maintained this citing concerned officials from the central bank while adding the IMF representatives also wanted to know the possible steps taken against wilful loan defaulters.

The IMF team, which is now in Bangladesh to assess the progress of the target set by the global lender in a lending package for restoring macroeconomic stability deemed under stress disbursing third tranches of its $4.7 billion worth of approved loan, met various departments of the central bank recently.

Simultaneously, the Bretton Woods Institution has also suggested formulating a climate risk testing framework for the financial sector to assess vulnerability-absorbing capacities of the banks and other financial institutions on the context of global warming that is severely affecting countries like Bangladesh.

The central bank officials present at the meetings reportedly said members of the multilateral lending agency wanted to know the possible reasons for not being able to curb inflation despite taking a contractionary monetary stance.

The central bankers explained to the IMF delegation that controlling inflation through only interest-rate mechanism is tougher here because of involvement of other non-monetary factors in the supply side.

The IMF delegates also wanted to know the liquidity status in banks amid the persisting contractionary monetary regime and the logic behind providing enhanced cash-support to the banks by the central bank.

They also talked about the forex reserve, possible crawling peg activities as well as the issue of non-performing loans (NPLs).

Fibre2Fashion News Desk (DR)