BM Desk : The nation’s non-performing loans (NPLs) are becoming out of hand. Despite its pledge to lower non-performing loans by the end of the year, Bangladesh Bank has struggled to control the problem. The International Monetary Fund’s (IMF) visiting mission in Dhaka,

However, has expressed delight with the revelation of the true amount of defaulted loans, which had previously been kept a secret.
The creation of the Export Development Fund (EDF) using foreign exchange reserves, as well as other refinancing and pre-financing arrangements, was questioned by the IMF. On Thursday, October 30, a meeting was conducted at Bangladesh Bank to explore these issues.

The IMF delegation was led by Chris Papageorgiou, head of the Development Macroeconomics Division. Bangladesh Bank’s Deputy Governor Dr. Habibur Rahman, Executive Director of the Research Department Dr. Ejazul Islam, and other related officials were also present at the meeting.

According to sources, under the terms of the IMF’s $4.7 billion loan program, the share of non-performing loans in state-owned banks must be brought down to below 10 percent. However, after the change of government last August, the actual amount of hidden NPLs began to surface. By the end of June this year, NPLs had risen to Tk 6.67 trillion—an increase of around Tk 4 trillion compared to the previous year. Currently, the default rate in state-owned banks has exceeded 40 percent, while in private banks it stands above 10 percent.

During the meeting, the IMF team also sought detailed information on the monetary policy framework, inflation control, interest rates, liquidity support, and reserve management. Although the IMF expressed satisfaction over the recent decline in inflation, it warned that a prolonged contractionary policy should not hinder investment growth.

Additionally, the IMF delegation inquired about the financial status of the six state-owned banks, liquidity shortages in the banking sector, provisioning deficits, recapitalization, foreign exchange crisis, and investment plans for the green economy.

When asked about the meeting, Bangladesh Bank’s Assistant Spokesperson Shahriar Siddiqui said that the IMF’s fifth review mission is conducting a regular visit. “They are collecting information to assess the progress in implementing the loan conditions—particularly focusing on inflation control, interest rates, liquidity support, reserve management, and measures to reduce non-performing loans,” he said.