REJAUL KARIM BYRON

The International Monetary Fund has set a new minimum foreign exchange reserves target for Bangladesh as the reserves have dropped at a faster-than-expected pace.

When the Washington-based lender approved the $4.7 billion loan in January, it had fixed a minimum net international reserve (NIR) of $26.81 billion for December this year.

Yesterday, the goal was revised downwards to $17.78 billion, according to documents of the IMF. The country will have to ensure a minimum reserves of $19.27 billion in March next year and $20.11 billion in June.

The overall balance of payments (BOP) has deteriorated, given an unprecedented reversal of the financial account leading to forex shortages, the IMF said in a report.

The report was released two days after the executive board of the lender completed the first review of the loan programme and the Article IV consultations and unlocked disbursements of $689 million in the second tranche.

The revision comes as the government could not meet two of the six targets that it had to reach in order to qualify for the second instalment. The two targets are related to the reserves and revenue collections.

For example, the minimum reserves target was set at $24.46 billion for June this year and it was later revised to $23.74 billion. The reserves stood at $19.56 billion at the end of the last financial year.

In October this year, the NIR amounted to $15.9 billion.

The government will have to raise tax collections by 20.41 percent to Tk 394,530 crore in June next year. Receipts stood at Tk 327,650 crore at the end of FY23 against the IMF target of Tk 345,630 crore.

The tax collection target has been kept unchanged at Tk 143,640 crore for December this year. Earnings will have to be Tk 276,170 crore in March.

In order to be eligible for the second instalment, Bangladesh had requested a waiver for the non-observance of the end-June 2023 performance criteria on the NIR caused by greater-than-expected worsening in external conditions and policy response that proved inadequate.

The IMF mission during talks with the government in October backed the waiver, based on the proposed corrective actions that entail further monetary tightening, supported by a neutral fiscal policy stance, “Thanks

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