The International Monetary Fund (IMF) has recommended amending the Bangladesh Bank Order (BBO) to prioritize the central bank’s autonomy and accountability, with price stability as its primary objective. This recommendation is part of the IMF’s “Bangladesh: Technical Assistance Report-Interest Rate Corridor Adoption,” aimed at transitioning Bangladesh to an interest rate-based monetary policy from a reserve money-based approach introduced in late 2023.
The IMF emphasizes that the amendment should focus on price stability, enhancing the legal autonomy of Bangladesh Bank, improving accountability, and eliminating direct lending to priority sectors. These changes would align the central bank’s governance and operational frameworks with the new monetary policy regime.
Despite the central bank’s announcement of this transition, the IMF noted no changes in governance, autonomy, transparency, or accountability since a 2018 assessment. Current provisions in the BBO grant significant powers to the government, which could constrain the central bank’s ability to achieve its objectives, particularly if a primary objective of price stability with a numerical inflation target is specified.
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