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.
Chief Adviser Prof Muhammad Yunus on Thursday paid tribute to the Armed Forces Division by placing a floral wreath at its headquarters.
Prof Yunus, who visited the division as part of his official duties, laid the wreath to honor the sacrifices and dedication of the members of the Armed Forces.
Following the wreath-laying ceremony, he signed the visitor’s book.
Chief Election Commissioner (CEC) Kazi Habibul Awal, along with four other election commissioners, announced their resignation during a press conference today at the Election Commission (EC) building. The resignation follows growing speculation and pressure.
CEC Awal stated, “In this changed situation, I and other commissioners have decided to step down. We’re handing over our resignation letters to the EC Secretary to send it to the President.” After submitting the letters, the CEC and some commissioners quickly left the premises, with no clear explanation for the absence of two election commissioners.
The resignations come amid increasing unrest tied to the registration of political parties such as Nagarik Oikya and Gono Odhikar Parishad. Sources revealed the CEC felt unsafe due to aggressive behavior from activists, prompting the decision to step down.
Protesters outside the EC building hurled shoes at vehicles carrying Election Commissioners Rashida Sultana, Md Alamgir, and Anisur Rahman as they left. Meanwhile, preparations for their exit had already been underway, with the commissioners reportedly relocating personal belongings from their offices.
The commission, appointed in February 2022 for a five-year term, had previously expressed confusion over demands for their resignation, maintaining they had conducted fair elections. However, internal discussions led to the collective decision to resign earlier than expected.
The government will now purchase LNG from the international spot market through open tender instead of negotiation.
Cabinet Committee on Economic Affairs (CCEA) in a meeting on Wednesday in principle approved a proposal in this regard.
Adviser of the interim government for Finance Dr. Salehuddin Ahmed, who presided over the meeting, said that the government will procure LNG through open tender.
The Energy and Mineral Division of the Ministry of Power, Energy and Mineral Resources placed the proposal where it sought approval to import LNG from 23 listed companies in the international spot market.
The adviser said that though such 23 companies were enlisted by the previous Awami League government and signed Master Sales and Purchase Agreement, they will remain unchanged.
He said that instead of applying the Speedy Increase of Energy and Power Supply (Special) Act 2010, the interim government will follow the Public Procurement Rules 2008 to ensure the competitive bidding process.
“We don’t want to change them as we wanted to import LNG quickly, ensuring proper competition among the suppliers,” he told reporters.
Committee also approved another proposal in principle to sign a contract to import urea fertiliser for the 2024-25 fiscal year from Fertiglobe Distribution Limited, UAE, on a G-to-G basis.
Meanwhile, the Cabinet Committee on Government Procurement (CCGP) in a meeting, presided over by the Adviser for Finance, approved 3 proposals for import of lentil and fertiliser.
As per the proposal, the Trading Corporation of Bangladesh will procure 10,000 metric tons (MT) of lentil from local firm Sahara Enterprise at a cost of Tk 98.20 crore with each kg priced at Tk 98.20.
The Commerce Ministry which moved the proposal on behalf of the TCB in the meeting mentioned in the proposal that the supplier firm was selected through open tender.
The CCGP approved two separate proposals of the Industries Ministry under which Bangladesh Chemical Industries Corporation will import 30,000 MT of bulk granular urea fertiliser from Fertiglobe Distribution Limited, UAE, under state to state contract at a cost of Tk 121.48 crore.
Each metric ton of fertiliser will cost $343.17.
Another 30,000 MT of bagged granular urea fertiliser will be procured from the local Karnaphuli Fertilizer Company Limited (Kafco) at a cost of Tk 116.99 crore with each metric ton costing $330.50.
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