IMF stresses market-based dollar rate for Bangladesh again

Speaking to the media at a press briefing recently, Krishna Srinivasan, IMF's Asia and Pacific Department director, emphasised that adopting a flexible exchange rate would yield positive outcomes for Bangladesh’s economy.

Srinivasan highlighted that such a rate would aid in reducing Bangladesh's financial account deficit, which ballooned to $8.36 billion in the first eight months of the current fiscal year, quadrupling from the same period last fiscal year.

However, there was a silver lining as Bangladesh’s current account balance returned to a positive trajectory, boasting a $4.76 billion surplus by February’s end.

The IMF convened the press conference to delve into its recently unveiled Regional Economic Outlook for Asia and the Pacific, which forecasts a modest slowdown in Bangladesh’s growth to 5.7 per cent this year from 6 per cent in 2023, attributed to more stringent policy stance.

Srinivasan underscored Asian countries, Bangladesh included, are better equipped than previously to withstand exchange rate fluctuations, thanks to reduced financial frictions and enhanced macroeconomic fundamentals and institutional frameworks.

He advocated for continued reliance on the exchange rate as a shock absorber and cautioned against overly relying on anticipated interest rate adjustments by the Federal Reserve.

It may be mentioned here that Bangladesh has been actively implementing a series of reform measures in line with IMF recommendations under a $4.7 billion loan programme initiated since 2022 due to dwindling dollar reserves.

Fibre2Fashion News Desk (DR)