Friday, 7 October, 2022

IMF delegates arrive in Dhaka today

  • Staff Correspondent
  • 14 July, 2022 12:00 AM
  • Print news

An International Monetary Fund (IMF) delegation is scheduled to come to Dhaka on Thursday to discuss the $4.5 billion budget support that Bangladesh sought to stabilise money market.

The delegation will hold talks with the senior officials of the finance ministry, the central bank, the National Board of Revenue and the Economic Relations Division (ERD).

Division chief in the IMF's Asia and Pacific Department Rahul Anand will lead the delegation. 

A loan deal with regard to the budget support may be finalised with the IMF by October this year, if the negotiations are fruitful, according to finance ministry officials.

Bangladesh sought the $4.5 billion budget support to fend off local currency taka’s free fall against the US dollar.

Foreign currency reserves slipped to nearly two-year low at $39.8 billion.

Bangladesh can meet five months' import bills with this reserve, which is much higher than the World Bank and IMF prescribed three months’ import bill coverage.

But at the time of economic uncertainty, they advise a reserve that can meet 8-9 months’ imports.

During the visit, the IMF officials will assess the impacts of the Ukraine war and global commodity prices hike, the pace of corona recovery and the government subsidies.

They IMF mission may suggest trimming subsidies, if found higher compared to that of other countries.

Given the spiraling energy, fertiliser and commodity prices, the government has set aside Tk827.45 billion as budget support as subsidy.

However, the subsidy amount may be 15 to 20 percent higher than that estimated in the FY23 budget, according to the finance minister.

The Washington-based multilateral lender could tie in conditions for the loan package.

The conditions could include measures to increase revenue, lower subsidy expenditure, market-based exchange rate and lending rate, and reforms in the banking sector and tax administration, the finance ministry official said.