Dhaka hopeful of $4.5b IMF loan

Dhaka is optimistic about getting the much-talked-about financial support of $4.5 billion from the International Monetary Fund (IMF) as the primary conditions for the loan have been met, say finance ministry officials.

A visiting team of the multilateral lender held discussions on the loan with different bodies of the finance ministry on Wednesday.

The Bangladeshi teams briefed the IMF delegation about the progress in implementing the four main conditions set by the organisation for the loan, people familiar with the matter said.

Officials said the Washington-based lender, scheduled to stay here till November 9, held meetings with the treasury and debt management, budget, and macroeconomics wings of the finance ministry.

Finance Secretary Fatima Yasmin led the Bangladesh team during the meeting with the macroeconomics wing in the afternoon.

Speaking to journalists after the meeting, the finance secretary said there would be many more meetings regarding the loan and progress in the negotiations would be made public thereafter.

However, people familiar with the matter told The Business Post the meeting highlighted the implementation of the four main conditions by the government to get the IMF loan.

The Bangladeshi teams told the IMF delegation the government has reduced subsidies in various sectors, thus increasing the prices of fertilisers and fuel, but the exchange rate of the taka against the dollar has been left to the market.

In addition, the gross and net calculations of foreign exchange reserves were presented to the IMF officials.

Implementing the key conditions would go a long way for the government to get the IMF loan, Bangladeshi officials said.

Finance ministry sources also said cash and debt management was discussed at one of the meetings. The modernisation of the revenue board, speeding up revenue collection, the increase in tax collection compared to the gross domestic product (GDP), formulating the income tax and customs laws, establishing good governance in banking, and reducing default loans were discussed as well.

While some of the conditions have already been met, the progress in implementing the others will be highlighted in future meetings with other bodies.

Sources said the IMF would assess the risks and problems of the economy as part of giving the loan. It would also review the extent to which the conditions had been met.

In July this year, Bangladesh sent a letter to the IMF asking for a loan of $4.5 billion. Governor of the central bank Abdur Rouf Talukder said there had been positive indications at the annual meeting of the IMF held in Washington this month that Bangladesh would secure the loan.

The IMF said in a press release on October 21 that the main purpose of coming to Dhaka this time is to discuss the reforms and policies of Bangladesh’s economy and the financial sector.

It also said more discussions will be held on borrowing from the IMF’s Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Trust (RST).

Of the $4.5 billion loan sought by Bangladesh, the country may get $1.5 billion for the balance of payments and $1.5 billion in budget support. The remaining $1.5 billion may come from the RST.

Sources said the IMF team would hold meetings with the Bangladesh Bank today. Later, it will also hold meetings with the National Board of Revenue, the Financial Institutions Division, the Economic Relations Division, the Ministry of Planning, and the Ministry of Commerce.

The delegation will have its last meeting with Finance Minister AHM Mustafa Kamal on November 8 or 9.