Economy
IMF to discuss $4.5bn loan in Dhaka next week
In the backdrop of higher inflation, dropping export receipts and consistent import bills, Bangladesh is set to resume an official dialog with the International Monetary Fund in late October for a budget-supporting loan worth $4.5 billion.
To attend the crucial meeting, a much-needed event for the government, a team from the IMF coming to Dhaka next week, an official said.
They will discuss the conditionality of credit entitlement at different levels of the government. The prime discussion will be with the Ministry of Finance, Bangladesh Bank and National Board of Revenue, official sources said.
The information over the IMF delegation’s visit surfaced amid the ongoing annual meetings of the World Bank and the IMF in Washington.
Bangladesh’s foreign exchange reserves stood at $38.94 billion at the end of August 2022, down nearly 19pc year-on-year, Bangladesh Bank reports showed.
At the end of August 2021, the country’s foreign exchange reserves reached their peak at over $48 billion due to fewer imports by businesses amid the pandemic coronavirus lockdown.
Sources in the finance division said the IMF will assess the risks and problems of the entire economy of the country before approving the loan. It will also take stock of the stings put forward by it to the government of Bangladesh for execution.
So far, the government has implemented four prime conditions for qualifying for credit. It has cut subsidies in various sectors, increased the prices of fertilizers and ballooned fuel prices to record levels.
The exchange rate of the local currency Taka against the US dollar is increasing as a result of the crisis of the US dollar in the local market.
The government is also keeping a foreign exchange gross account as well as a net account and reporting it regularly to the IMF. By implementing these four key conditions, the government has gone a long way in obtaining the IMF loan. If both sides reach an agreement in the ensuing talk, it may take until December for the first tranche of the loan to enter into the exchequer.
According to finance division sources, the annual general meeting of the World Bank (WB) and the IMF started in the US on October 10. It continued until October 16. A delegation led by the Governor of the Central Bank of Bangladesh, along with the Finance Secretary, is attending the meeting. Furthermore, the delegation is meeting with various organizations from across the countries, on the sidelines.
Sri Lanka’s central bank governor held a meeting with Standard Chartered Bank’s Asia Pacific head and JP Morgan on Thursday. Meanwhile, an informal meeting between the Bangladesh delegation with the IMF has also been held in Washington.
Since Bangladesh has asked for the loan on an urgent basis and some conditions of the loan have already been implemented, a decision to grant the loan may be made soon, according to a source.
Bangladesh’s dollar crisis has become evident due to the increase in import expenditure at an excessive greenback purchasing rate and fall in export receipts and incoming remittances.
The IMF loan was formally requested by the government in a letter to the IMF in July. On July 14, an IMF mission came to Bangladesh and held meetings at various levels of the government. The team left Dhaka on 22nd July.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
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