The chief adviser takes part in a talk at Chatham House, an independent think-tank based in London,
Chief Adviser Prof Muhammad Yunus has credited the International Monetary Fund (IMF) for its “positive role” in helping Bangladesh overcome its concerns about allowing market forces to determine the exchange rate.
He made the remark in response to a question during a talk at Chatham House, an independent think-tank based in London, today.
For all latest news, follow The Daily Star’s Google News channel. His remark came nearly a month after Bangladesh Bank (BB) adopted a market-based exchange rate to secure the release of the fourth and fifth tranches of its $4.7 billion loan approved by the IMF in January 2023.
BB had been reluctant to fully open the market due to concerns that it could create instability, increase import costs, and further stoke inflation, which has remained over 9 percent for more than two years.
However, Bangladesh’s foreign exchange market has remained relatively stable since the shift, with the taka depreciating only marginally.
The weighted average exchange rate of the US dollar was Tk 122.97 on June 4, the last working day before the 10-day Eid holiday.
A month earlier, banks were exchanging the dollar at Tk 122, according to BB data.
Yunus said the IMF had been controlling the release of the loan instalments and agreed to disburse funds after Bangladesh decided to let the market determine its exchange rate.
He said they were worried about it.
“Because so far, we were controlling it so that we didn’t expose ourselves to a drain of foreign exchange due to the system.
“So, opening this to the market is really a big decision for us,” he added, noting that they had tried to convince the IMF by explaining the potential risks.
“They said, ‘No, we understand, but we studied it. We think you can handle it.’
“In my time, I said no,” Yunus recalled. “[But the IMF said], ‘Nothing is going ahead unless you do that—we’re not releasing our funds.'”
The chief adviser said Bangladesh agreed with the IMF on the condition that the policy could be reversed if it caused difficulties, in order to protect the economy.
“IMF said, ‘Okay, go ahead.’ We opened it. Nothing happened. Same exchange rate—just a little bit of movement. It’s normal. It’s okay.
“So, we are celebrating that. Finally, we are seeing strength in the economy, and so on. So, the IMF’s role is very positive. It’s not a negative one. It’s not trying to push us into trouble because of some principle they’re holding on to. It’s not like that.
“We were not willing to jump into the water. They said, ‘Come on, you can do it.’ And finally, we did it. That’s it. So, we are thankful to the IMF,” he said.
Yunus said the interim government had received an amazing response from governments around the world.
“This has given a moral boost to the government—that we are not abandoned.
“You mentioned the IMF. Yes, the IMF is also helpful. The World Bank is helpful. All the international institutions—not everyone uses those adjectives.”