IMF differs with BB over calculating forex reserves

 
Bangladesh Bank (BB) said on Thursday the first round of dialogue with a visiting delegation of the International Monetary Fund (IMF) for obtaining a loan of $4.5 billion from the global lending agency was satisfactory, an official said. However, IMF differed with Bangladesh Bank over the calculation of foreign exchange reserves. If the central bank follows the IMF standard for calculating reserves the amount stands at $27.80 billion. Some more meetings with IMF will be held on 30 and 31 October and 2 and 8 November 2022.

Bangladesh Bank's spokesman Md Abul Kalam Azad said that they were very optimistic about the progress made in the meeting on Thursday, "Today's meeting ended successfully," he told journalists.

"The first phase of talks was very satisfactory. Both sides cooperated with each other and the IMF team now knows the scenario," he said.

He said the IMF delegation wanted to understand the real scenario of Bangladesh's foreign currency reserves and the condition of the macroeconomy in Thursday's meeting. Central bank's Governor Abdur Rouf Talukder, Deputy Governors Kazi Sayedur Rahman and Ahmed Jamal, Chief Economist Md Habibur Rahman led the Bangladesh Bank's team to the meeting.

Bangladesh Bank officials replied to queries by the IMF team with the latest information of the country's macroeconomic situation, the BB spokesman said.

The IMF team also wanted clarification on reserves as the global lender had placed different suggestions for calculating the actual amount of forex reserves, said officials who have knowledge of the process.

In the meeting, the central bank's officials said that the current reserve is around $35.80 billion.

If the central bank follows the IMF standard for calculating reserves the amount stands at $27.80 billion.

The IMF team asked Bangladeshi officials to exclude $7-8 billion spent on the export development fund (EDF) and $200 million loaned to Sri Lanka.
While most of the world's foreign exchange reserves are calculated according to the IMF's Balance of Payments and International Investment Position manual Bangladesh calculates net and total foreign exchange reserves.

Funds provided to various projects, including EDF are excluded from the net calculation.

Bangladesh Bank publishes the gross or total account of reserves.

On Thursday, the discussion was divided into six sessions of which three sessions covered foreign exchange reserves.

Other issues that came up in the meeting were good governance in financial institutions, banking sector performance, exchange rate, cross-border inter-bank credit, export situation, import restrictions and FDI projection and long-term defaulted loans.