Bangladesh is likely to receive $1.3 billion from the International Monetary Fund (IMF) by June, as the Bangladesh Bank has agreed to make the exchange rate more flexible — a key condition of the IMF’s $4.7 billion loan programme.
The central bank will adopt a market-based ‘crawling peg’ system, allowing the dollar rate to fluctuate by up to 4 per cent from the midpoint of Tk 119. This means the dollar could trade as high as Tk 123, BB officials said.
Currently, the fluctuation band is limited to 2.5 per cent, but that corridor is now set to widen.
The decision follows nearly a month of negotiations between Dhaka and the IMF over currency reform.
The central bank’s move to loosen control over the dollar rate helped resolve was a major sticking point in the ongoing loan program.
Bangladesh Bank governor Ahsan H Mansur is expected to announce the IMF loan release and the exchange rate reform at a press conference today, which he will attend virtually from Dubai, BB officials said.
The fourth tranche of the loan had been held up due to disagreements over exchange rate policy and other economic reforms.
An IMF mission visited Dhaka from April 6 to 17 but failed to secure a deal. Talks continued during the IMF-World Bank Spring Meetings in Washington in late April but also ended without resolution.
A breakthrough was finally reached after virtual meetings on May 5 and 6, where the central bank agreed to ease its grip on the currency market.
So far, Bangladesh has received $2.31 billion in three installments. The remaining $2.39 billion depends on the country meeting several reform targets, including stronger revenue collection and better financial sector governance.