Coordination body formed to implement IMF loan conditions

The Finance Division has formed a 22-member coordinating committee to implement the conditions for the $4.5 billion loan from the International Monetary Fund (IMF).

Rehana Perven, additional secretary (macroeconomic) of the Finance Division has been made chairman of the committee and Shirajun Noor Chowdhury, director general, monitoring cell, Finance Division has been made vice-chairman, according to a circular issued by the budget wing of the ministry on Monday.

According to a financial ministry official, the committee’s works include auto fixing fuel prices, determining the minimum level of reserves and amending the Bank Company Act.

According to the circular, the committee will also look into the Extended Credit Facilities (ECF), Extended Fund Facilities (EFF), and Resilience and Sustainability Facilities (RSF) of the IMF policy action.

Finance Division Additional Secretary Shirajun said, “The IMF loan is not a matter of one or two ministries. Many ministries are involved in it. Therefore, the members of this committee will coordinate all the meetings that will be held in various ministries.”

The committee will review the policy measures for the IMF loan programme and determine procedures to remove any obstacles to the implementation of the IMF conditions.

According to the circular, the committee will hold a meeting every two months, where any issues regarding the policy implementation will be addressed.

IMF’s Deputy Managing Director Antolnette Sayeh is due in Dhaka on January 14 for a five-day visit, to finalise the agreement for a $4.5 billion loan Bangladesh applied for last July.

During her visit, Sayeh will meet with Prime Minister Sheikh Hasina, Finance Minister AHM Mustafa Kamal, Bangladesh Bank Governor Abdur Rauf Talukder, and other senior government officials.

According to officials familiar with the matter, Antolnette Sayeh’s visit is of utmost importance as she might preside over the next IMF board meeting and explain the current situation in Bangladesh and the rationale of the loan to the board members.

If everything goes well, the IMF board will sanction the loan in January and Bangladesh will receive the first instalments of $447.8 million in February. Besides, upon fulfilling of time bound reform measures stated in the loan proposal, the Washington-based lender will later disburse six equal instalments of $659.18 million under the loan programme.

The three main targets for the three major conditions, which were set by the IMF with the view to building on the country’s reserve buffer and creating fiscal space, would progressively increase with each instalment.

In order to meet the IMF conditions for the loan, the government is already working to amend the Bank Company Act. A draft of the amendment is already under review by the finance ministry, according to officials.

The IMF has also asked the government to introduce a market-based dollar exchange rate, increasing the tax to GDP ratio to 14 per cent from the existing 9 per cent.