DHAKA, June 27, 2024 (BSS) - The International Monetary Fund (IMF) has welcomed Bangladesh for progress in creating a roadmap to reduce the non-performing loans (NPLs).

"Priorities should focus on reducing NPLs, implementing risk-based supervision, and enhancing corporate governance. In this context, we welcome the authorities' progress in creating a roadmap to reduce NPLs, but this process should be carefully sequenced," said Chris Papageorgiou, IMF Mission Chief for Bangladesh.

Talking to BSS, Chris Papageorgiou said above all, the definition for loan classification and provisioning rules should be better aligned to international standards.

This should be followed by an asset quality review to evaluate the state of banks' balance sheets, he added.

At the same time, he said, continuing reforms to develop the domestic capital market is essential to support the country's long-term development goals.

"In this regard, we welcome the authorities' intention to reform the primary dealers' system as a first step towards fostering capital market development," he added.

Since the authorities' homegrown economic reform program supported by the IMF financial arrangement was approved in January 2023, Chris Papageorgiou, however, said, the authorities have made good progress in implementing reforms.

These include introducing a more flexible exchange rate framework, modernizing the monetary policy framework, rationalizing energy subsidies, while also working on supporting social protection measures to support the most vulnerable face the effects of these reforms, enhancing regulatory frameworks in the banking sector and implementing climate change-related reforms, he added.

He said, "We welcome the authorities' continuous commitment to comprehensive reforms to address long-standing structural issues and vulnerabilities including those related to climate change."