Bangladesh in talks with IMF for $1bn budget support

The government is seeking Tk 1 billion from the International Monetary Fund as the first budget support in a decade.

Published : 29 June 2022, 03:26 PM
Updated : 29 June 2022, 06:36 PM

Bangladesh took $987 million from the IMF as budget support last time in the 2011-12 fiscal year under its Extended Credit Facility to stabilise the economy.

Officials of the finance ministry, the Economic Relations Division and IMF discussed the latest proposal for the third day on Wednesday, according to two Bangladesh

representatives who attended the talks. Both officials requested anonymity as they were not authorised to speak to the media about the ongoing talks.

The size of the loan, interest rates and the conditions were discussed at the meetings, the official said, adding that the discussions were at the initial stage.

After a Tk 2.04 trillion deficit in the revised budget for the fiscal year ending on Thursday, the government is set to keep the deficit at Tk 2.45 billion in the new fiscal year.

The National Board of Revenue collected Tk 2.2 trillion until May 21 against a target of Tk 3.3 trillion in the outgoing fiscal year. Therefore, it is set to miss the target by a huge margin, although revenue grew by nearly 15 percent year on year.

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US September 4, 2018. Reuters

To cut the deficit, the government aimed to borrow Tk 1.24 trillion from domestic sources and Tk 770 billion from foreign lenders in the revised budget for the outgoing fiscal year.

For loans in the past, the IMF set some conditions for reforms to Bangladesh’s financial sector. Such conditions were also discussed this time.

Officials at the finance ministry said they were also discussing budget support with the World Bank and the Asian Development Bank.

The IMF extends budget support usually under its Resilience and Sustainability Facility, Extended Credit Facility and Extended Fund Facility.

It proposed Bangladesh take loans under the Resilience and Sustainability Facility to mitigate the impact of climate change. The interest rate is 1.53 percent and the service charge is 0.25 percent for loans under this facility.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher