$4.5b in IMF loans likely to be secured today

Bangladesh is all set to secure $4.5 billion in loans from the International Monetary Fund (IMF), which will be disbursed in the next three years under specific conditions, mostly a series of financial sector reforms.

Stakeholders – officials from the Bangladesh Bank, different ministries and divisions – have already hammered out details regarding loan conditions with the IMF for this crucial support, and the formal announcement is set to arrive today.

The IMF is scheduled to hold a key meeting with Finance Minister AHM Mustafa Kamal on the day, a number of senior officials in the finance ministry and central bank confirmed the matter to The Business Post.

In July this year, the finance minister had sent in a formal request to the IMF for the $4.5 billion loan.

An International Monetary Fund (IMF) mission – led by its Chief Ruhul Anand – arrived in Dhaka on October 26 on a 15-day visit to discuss the terms and conditions of granting the loan to Bangladesh.

The IMF mission completed its loan-related discussions on Tuesday, and reached the final stage through a wrap-up meeting with senior officials of the Bangladesh Bank and finance ministry.

Financial sector reforms prioritised

Ministry sources pointed out that the IMF is granting the 4.5 billion in loans under strict terms and conditions. The mission prioritised financial sector reforms and implementation of measures for boosting revenue collection.

Another key aspect of the IMF conditions is the implementation of a pricing formula for fuel, electricity and gas, and also a cutback on subsidies.

Aside from banking sector reforms, the IMF discussed matters related to trade deficit, cross-border interbank loans, gross reserves, external loans, exchange rate development, oil import volume, banking sector issues, monetary and exchange rate issues, net reserve calculations, and current challenges faced by the local banking sector.

Of the total $4.5 billion loan, Bangladesh sought $1.5 billion each for balance of payment, budget support, and for the IMF’s newly created Resilience and Sustainability Trust fund. The trust helps countries build resilience to external shocks and ensure
sustainable growth.