IMF to sit with commerce and energy ministries today

The International Monetary Fund (IMF) wanted to know steps taken by the government to meet the challenges after Bangladesh’s economic graduation into a developing nation, an official of the commerce ministry said.

“In February last year, the United Nations Committee for Development Policy (CDP) proposed Bangladesh’s name for transition from Least Developed Country (LDC) to a developing one. As a result, Bangladesh will quit the LDC countries’ set in 2026,” the official, who requested anonymity, said.

Because of the transition, Bangladesh will lose duty benefits that it is currently availing in many developed markets. Bangladesh had been enjoying duty free access into many markets including the EU but the entitlement will vanish after 2026.

“Concerns will arise over merchandise exports and cost of drug production will go up. There will be challenges galore for Bangladesh and the visiting IMF team wanted to know about our preparations,” the official said.

A delegation led by Rahul Anand, head of Asia and Pacific Division of the IMF has been meeting with various government divisions since October 26. As a continuation of that, a meeting with the Ministry of Commerce is scheduled to take place at the Secretariat on Wednesday.

Commerce Ministry’s Senior Secretary Tapan Kanti Ghosh is expected to lead his ministry. Besides, on the same day, another meeting with the Power Division is scheduled to be held. That meeting will be led by Secretary to Power Division Md. Habibur Rahman.

Meanwhile, the Ministry of Commerce has discussed various issues with the country’s exporters and the outcome will be presented in the meeting. The ministry will convey the IMF about its medium-term export target for apparels and other goods and services. Currently, about 80 percent of export receipts are generated by selling various clothing.

The commerce ministry will also tell the delegation about the government’s preparation on forming sector-based sub-committees to face post-graduation challenges.

The government is making efforts to sign Free Trade Agreements (FTAs) or Preferential Trade Agreements (PTAs) with various countries to increase bilateral trade. All business organisations are also active in this regard. Besides, the reform of tariff structure is underway. That will be discussed, too.

Exporters are afraid about the ensuing challenges. Not only the developed world, even China and India may cease offering duty benefits to Bangladesh’s shipments after 2026.

However, duty-free benefits under GSP in the EU will continue for another three years. Then the duty will be imposed on the export products of Bangladesh at the regular rate.

According to recently published calculations of WTO, after getting the new status, the annual export of Bangladesh may decrease as much as 537 million dollars or Tk 45,000 crore due to increased tariffs.

Meanwhile, the government has allocated a total of Tk 82,745 crores in subsidies in the national budget of the current fiscal year. Most of the subsidies are earmarked for fuel oil, gas, electricity and fertilisers. Subsidies are called ‘subsidy management’ by the IMF. Such a subsidy management has a chapter called ‘cash loan,’ which is ultimately a subsidy. This loan is given to Bangladesh Petroleum Corporation (BPC), Power Development Board (PDB) and other companies. But BPC and PDB do not pay back the fund to the government.

According to sources, the government gave loans to PDB to buy electricity from the private sector at a higher price and sell it at a lower price. This loan is also a form of subsidy. The IMF will advise to take precautionary measures in future to recover these debts.

Bangladesh asked the IMF for a loan of 4.5 billion dollars in July. Its team is now in city to discuss the debt.