The Bangladesh Bank intends to replace the current SMART formula for interest rate fixation with a market-based system, as suggested by the International Monetary Fund (IMF). The SMART formula, introduced last year, pegged lending rates to the six-month moving Average Rate of Treasury bills. However, the central bank’s failure to publish the benchmark rate at the end of April has left banks and non-bank financial institutions uncertain, possibly leading them to rely on the existing reference rate for loan pricing. This potential suspension of the SMART formula coincides with an ongoing IMF mission in Dhaka to evaluate progress on the $4.7 billion loan program.
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