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.
