Decision on the IMF loan January 30
Bangladesh's $4.5 billion loan programme with the International Monetary Fund is expected to get the final approval on January 30, said the lender's visiting top official yesterday.
"In our discussion, we focused on the key elements of this programme, including the longstanding challenges of raising tax revenues, and building a more efficient financial sector," said Antoinette Monsio Sayeh, the deputy managing director of IMF, in a press statement following her meeting yesterday with Prime Minister Sheikh Hasina.
"We don't' want any bail-out. This programme of ours is not a bail-out but a preemptive measure."
The government has agreed to time-bound conditions, including some key structural reforms stalled for years, for the 42-month programme in the staff-level agreement reached so far.
"Reforms in these areas, combined with measures to facilitate private investments and export diversification will help create conditions to make Bangladesh's economy more resilient and support long-term, inclusive and sustainable growth," she said.
Raising the tax-GDP ratio, implementing the VAT law, setting up an asset management company to dispose of soured loans, bringing down the banking sector's default loans to within 10 percent and raising the capital adequacy ratio to the BASEL 3 requirement of 12.5 percent, are among the reforms agreed upon.
Periodically adjusting the fuel price, implementing the climate-related proposals made in the budget and at various international conferences and increasing remittance receipts through formal channels are also on the task list.
Increasing social spending and better targeted social safety net programmes, increased exchange rate flexibility, developing the capital and bond market, expanding and diversifying exports and modernising the monetary policy framework are the other agreed reforms.
The government has already started implementing some of the reforms such as raising the fuel and power prices and the central bank is aiming to move towards a market-based, flexible and unified exchange rate regime (within a 2 percent variation) by the end of this fiscal year.
Earlier on Sunday, Sayeh, who is in Bangladesh on a four-day tour as part of her four-country trip to Asia, met with Finance Minister AHM Mustafa Kamal and Bangladesh Bank Abdur Rouf Talukder.
"I welcome Bangladesh's comprehensive set of measures to deal with [the impact of global shocks]."
She expressed satisfaction with the initiatives taken by the government and the central bank to deal with the ongoing crisis, said a press release from the finance ministry after she met with Kamal.
"Just like countries around the world, Bangladesh is now dealing with the impact of global shocks -- first from the pandemic and then from the ongoing war in Ukraine. We discussed the impact of these shocks on Bangladesh's economy, and I welcomed Bangladesh's comprehensive set of measures to deal with them -- including their focus on ensuring protection for the vulnerable during these difficult times," Sayeh said.
The repercussions made the government realise that it needed to push through on stalled reforms to strengthen the economy and hence the knock on the doors of the Washington-based multilateral lender for a framework to implement the agenda.
"We don't want any bail-out. This programme of ours is not a bail-out but a pre-emptive measure," Prime Minister Sheikh Hasina told Sayeh in her meeting yesterday, reports UNB.
The pace of Bangladesh's socio-economic progress has slowed due to the pandemic, the Ukraine war and the resulting sanctions and counter-sanctions, Hasina also said.
Bangladesh is also facing difficulties due to the price hike of commodities, she said, adding that the government has widened the social safety net and expanded food programmes to support the lower-income people.
In response, Sayeh said the IMF will assist in Bangladesh's efforts to face the problems.
"Bangladesh aspires to become a developed, prosperous and higher-income country by 2041 -- the IMF will continue to support this aspiration," Sayeh was quoted as saying.
Kamal, PM's International Relations Affairs Adviser Gowher Rizvi, Principal Secretary M. Tofazzel Hossain Miah, Talukder, Senior Finance Secretary Fatima Yasmin and IMF Resident Representative in Dhaka Jayendu De were present at the meeting.