Bangladesh central bank governor defends rejection of IMF advice

The Daily Star, April 28, 2009

Outgoing Bangladesh Bank Governor Salehuddin Ahmed today said he had rejected at least four IMF suggestions, including the one of adopting policy support instrument (PSI), in four years in office considering the country’s interest.

The other suggestions were: Introducing a tight monitoring policy, increase in cash reserve requirement (CRR) for the scheduled banks with the Bangladesh Bank and opening of capital account.

“We had told the IMF that we didn’t need a PSI,” Dr Salehuddin Ahmed, whose tenure would end this month, told reporters at his farewell briefing in the central bank.

Ahmed also said, “There was no capital outflow from Bangladesh in the recession period. We stayed safe because of not allowing opening of capital account.”

He cited example of India from where billions of dollars have been out flown for allowing opening of capital account.

Ahmed also stressed doing homework and developing negotiation capacity of officials before going for singing any deal with donors such as International Monetary Fund (IMF) and the World Bank.

“The IMF listened to us and was convinced,” said Ahmed who will be replaced by Dr Atiur Rahman, an economist from May 1.

The governor also focused on central bank’s role as the regulator of the financial sector, overall economic situation and challenges in the recession period and the fiscal package to tackle the recession-hit industries.

“Over the past four years the BB acted as an enabling and caring body for the financial sector,” said Ahmed.

He said, “The financial sector and the country’s overall macroeconomic situation remain stable because of the central bank’s proper role.”

Export and remittance remain steady despite global meltdown, he noted.

Bangladesh’s macroeconomic stability is better than other South Asian nations, mainly because of BB’s prudent role, he claimed.

Still he emphasised on more interactions with the stakeholders for better stability of the financial institutions.


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