Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The visiting representatives from the International Monetary Fund (IMF) have enquired about the monetary move taken by the Bangladesh Bank (BB) to control inflation and stabilise liquidity situation in banks, sources at the central bank said.
They also wanted to know the possible steps taken against wilful loan defaulters.
The IMF team, who 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 BB on Monday.
Simultaneously, the Bretton Woods Institution has 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.
BB officials present at the meetings 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 BB.
Seeking anonymity, a BB official said the IMF representatives wanted to know the action taken by the central bank against loan defaulters, particularly wilful ones.
The BB officials informed them about the latest wilful defaulters-related circular that elaborated about credit facility restrictions and legal proceedings against such defaulters.
BB spokesperson Md Mezbaul Haque told reporters that the IMF delegation recommended making a climate risk testing framework for the financial sector.
They also talked about the forex reserve, possible crawling peg activities and inflation. The issue of non-performing loans (NPLs) was also discussed in the meeting, he said.