IMF’s two tranches to be placed to board on June 23

The proposal to release the third and fourth tranches of the International Monetary Fund's $4.7 billion loan is set to be presented to the multilateral lender's board on June 23 after the government fulfilled all prior conditions.

The two tranches amount to $1.3 billion.

The fourth instalment of the loan programme was supposed to be disbursed in February, but the government failed to fulfil two of the prior conditions -- the introduction of a market-based exchange rate and restructuring of the National Board of Revenue -- then.

The two conditions were fulfilled in May. Subsequently, the IMF staff and the government struck a staff-level agreement on May 14.

On June 11, during a talk at London's Chatham House, Chief Adviser Muhammad Yunus commended the IMF for insisting on the two contentious reforms, particularly the liberalisation of the exchange rate.

"Opening this [exchange rate] to the market is really a big decision for us," he said, adding they had tried to convince the IMF by explaining the potential risks.

But the IMF stood firm.

"We opened it. Nothing happened. The same exchange rate -- just a little bit of movement. It's normal. It's okay. So, we are celebrating that. Finally, we are seeing strength in the economy, and so on," he added.

Bangladesh's foreign exchange market has remained relatively stable since the adoption of the market-based exchange rate, with the taka depreciating marginally.

On June 4, the last working day before the 10-day Eid holiday, the weighted average exchange rate of the dollar was Tk 122.97. A month earlier, it was Tk 122, according to BB data.

The request to top-up the existing loan amount will also be placed at the board meeting, according to the schedule published on the IMF website yesterday.

Should the board agree to release the two tranches and authorise the top-up, Bangladesh's strained foreign exchange reserves are set to get a substantial boost this month with about $2 billion coming in as budget support from other bilateral and multilateral lenders.

Bangladesh is expecting to get $900 million from the Asian Development Bank's two budget support programmes, the proposal for which would be placed in the ADB's board meeting on June 19, according to the finance ministry officials.

Of the amount, $500 million is expected for climate-related budget support and another $400 million is expected to reform the banking systems.

In co-financing deals with the ADB, the Asian Infrastructure Investment Bank will provide $400 million and the Agence Française de Développement, the French Development Agency, will provide $100 million.

The World Bank will provide $200 million in budget support, which will be placed at their board meeting on June 20, the finance ministry officials said.

"The Government of Bangladesh and the World Bank are preparing a development policy credit scheduled for the World Bank Board discussion later this month, which would support transparency and accountability in domestic revenue mobilisation, banking sector, data production and dissemination, public investment management and procurement, audit and accountability, and the delivery of social programs," said the WB in a statement yesterday.

Besides, Japan will release $418 million as a Development Policy Loan to support economic reforms and climate resilience.

As of May 29, reserves stood at $20.57 billion as of May 29, according to the latest published data by the Bangladesh Bank.