IMF suggests enhanced supervision for banking sector

Staff Correspondent | Published: 21:22, Mar 08,2018 | Updated: 23:13, Mar 08,2018

 
 

A visiting mission of International Monetary Fund on Thursday suggested enhanced regulation and supervision for the country’s banking sector, particularly for state-owned commercial banks, with a view to ensure long-term capital for economic growth.
Team leader of visiting IMF staff team Daisaku Kihara made the remarks while speaking at a press briefing on Wednesday at the Bangladesh Bank secretariat in the capital following the completion of the team’s 12-day visit.
The team during its visit held a number of meetings with finance minister AMA Muhith, Bangladesh Bank governor Fazle Kabir, National Board of Revenue chairman Md Mosharraf Hossain Bhuiyan, among other senior government officials, along with representatives of the business and banking sectors, labour unions, think tanks, and development partners.
Mentioning Bangladesh’s economic growth as robust and inflation would remain stable, Daisaku Kihara also emphasised on a number of issues including judicial reform for expediting loan recovery, broadening tax base, implementing VAT reform plan, enhancing public investment and social spending.
Bangladesh’s economic growth has exceeded 7 per cent for a second consecutive year in FY 2017 depending on domestic demand, he said.
To continue with the economic growth, Bangladesh would need to tackle a number of challenges including creating fiscal space for infrastructure investments and social safety nets, making the financial sector more efficient, enhancing the business environment and strengthening governance, he said.
He said, ‘mobilising long-term capital for growth will depend on policies to make the financial sector more efficient.’
‘This will require enhancement of banking sector regulation and supervision, in particular for the state-owned commercial banks, avoiding regulatory forbearance, improving corporate governance, and implementing judicial reforms to expedite loan recovery,’ he said.
He said that monetary policy should be vigilant against inflation accelerating above the target after a recent pick-up in food inflation, while macro-prudential policies should aim to keep private credit growth in line with the authorities’ target.
Fiscal policy should keep the public debt ratio stable, while strengthening public investment management, said the IMF visiting team leader.
The Rohingya refugee crisis could add spending pressures and continued financial support from donors would be essential, he said.

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