"By all conventional indicators, Bangladesh is facing serious macroeconomic distress, as the International Monetary Fund (IMF) recently noted. Inflation remains stubbornly high. The taka has depreciated significantly. Banks are undercapitalized, and non-performing loans have surged. At the same time, public trust in core institutions is sinking, nowhere more so than regarding the judiciary and financial enforcement bodies. The IMF, currently reviewing the fifth tranche of its 5.5 billion USD loan package to Bangladesh, has acknowledged these risks in unusually cautious language."
"In a statement released on November 13th, mission head Chris Papageorgiou praised the government's monetary tightening and efforts to restore foreign reserves, but added a clear warning: "downside risks remain significant, particularly if policy responses are delayed or inadequate." That line carries particular weight. Concretely, the IMF is signaling not only concern over Bangladesh's fiscal and monetary health, but also over its institutional capacity to deliver and sustain reform."
Bangladesh is experiencing serious macroeconomic distress marked by stubbornly high inflation, significant taka depreciation, undercapitalized banks, and surging non-performing loans. Public trust in core institutions, especially the judiciary and financial enforcement bodies, is falling. The IMF, while reviewing a $5.5 billion loan tranche, acknowledged risks, praised monetary tightening and reserve-restoration efforts, and warned that downside risks remain significant if policy responses are delayed or inadequate. Institutional capacity to deliver and sustain reform is a central concern. Technical macroeconomic targets cannot be separated from institutional quality, since political capture, weak judicial independence, and arbitrary enforcement can cause programs to unravel.
Read at Business Matters
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