Bangladesh’s net foreign currency reserves have stood at $16.77 billion as of Jun 30, exceeding the $14.7 billion target set by the International Monetary Fund under a $4.7 billion loan programme.
Bangladesh Bank disclosed the data for the first time on Tuesday, with the gross reserves at $26.81 billion.
In line with the IMF-approved BPM6 methodology, the reserves stood at $21.83 billion, said Mezbaul Haque, spokesman and executive director of the central bank.
Under the methodology, the net reserves calculation subtracts short-term liabilities from gross reserves.
It has been releasing the reserve data in accordance with BPM6 since Jul 2023, after the IMF had approved the loans.
This is the first time Bangladesh has exceeded the IMF's target since the multilateral lending agency approved the loan package in February, 2023.
Economist Ahsan H Mansur told bdnews24.com that increasing the policy rate or repo interest rate had a positive effect on the economy while the flow of remittances had been increasing in the last few months.
The month of June also saw the highest remittances in a few years, said the executive director of Policy Research Institute.
"But reducing import costs while maintaining reserves may lead to inflation. So, cutting import expenses isn't recommended as it drives up prices. The central bank should prioritise safeguarding the livelihoods of ordinary people," he added.
Bangladesh received the third tranche of $1.15 billion under the IMF loan agreement on Jun 27.
Besides, it also received funds totalling $900 million from South Korea, the International Bank for Reconstruction and Development, or IBRD, and the Islamic Development Bank, or IDB.
So, a total of $2.5 billion has been added to the reserves..
Bangladesh's reserves reached its peak at $48 billion in August 2021 as imports stalled amid the COVID-19 pandemic.
But bolstered economic activities after the pandemic and the Russia-Ukraine war triggered a dollar shortage, straining reserves.
The government had to take regulatory measures as well as seek loans from the IMF to increase the supply of foreign currency.
As a condition of that loan, Bangladesh has to go through a number of financial and policy reforms, including:
-Making the foreign exchange rate market-oriented.
- Lifting the 9 percent limit on the interest rate on bank loans.
- Publishing the risk-based asset information of bank loans.
- Publishing the net account of the reserve according to the IMF-approved method BPM6.
- Reducing default loans in the banking sector.
- Developing the capital market.