IMF team to arrive Wednesday to discuss $4.5bn loan

A 10-member delegation of the International Monetary Fund (IMF) is arriving in Dhaka on Wednesday to discuss various terms over a $4.5 billion credit that Bangladesh has appealed for.

The delegation will participate in discussions on various issues including financial sector and policy reforms in the following two weeks.

Rahul Anand, head of the IMF’s Asia and Pacific Division, will lead the delegation. This information was shared through a press release of the head office of the IMF in Washington, last Friday.

The IMF said the delegation will visit Bangladesh from October 26 to November 9 for discussions with the authorities on economic and financial sector reforms and policies.

The visit is meant for preparing a ground for reaching a loan agreement under the IMF’s Extended Credit Facility/Extended Fund Facility. Also, there will be another discussion if Bangladesh could qualify for loan assistance under the IMF’s new initiative ‘Resilience and Sustainability Facility (RSF)’.

The IMF has set up the RSF to provide long-term credit support to countries that are at high risk of the negative effects of climate change, such as Bangladesh.

IMF representatives will meet with the government officials as well as other partners during their visit. The lending agency said discussions will continue in the coming months, too.

Meanwhile, the annual conference of the IMF-World Bank in Washington, the capital of the United States, ended recently. The finance minister could not attend the meeting. Bangladesh Bank Governor Abdur Rauf Talukder led the delegation of 11 members to the conference on behalf of the Bangladesh government. He also held a meeting with IMF officials on October 16.

Then he said the IMF has verbally assured him of extending the loan. However, the IMF will also put strings before giving the credit, that Bangladesh needs badly to support its budgetary expenses.

Highlighting the terms of the IMF, the governor said, the IMF wants the revenue administration of Bangladesh to be modernised and speeding up the revenue collection process. The ratio of revenue collection to Gross Domestic Product (GDP) is still low in this country.

It has been stuck at 7.6 percent for many years. This rate is the lowest in South Asia. Apart from this, there is currently a high level of non-performing loans across the banking sector. The IMF wants the loans to be paid back. 

According to sources in the Ministry of Finance, Bangladesh sent a letter to the IMF asking for a loan to maintain the balance of transactions and budget support, highlighting the overall situation of the economy.

Out of the $4.5 billion loan, Bangladesh has asked for $1.5 billion to $3 billion for balance of payments and budget support. The remaining 1.5 billion is sought from the IMF’s new initiative, the Resilience and Sustainable Development Fund (Trust), respectively.