High-level IMF team seeks second round of talks in Dhaka in January

The delegation has proposed a four-day trip from Jan 14 next year for the talks in a recent letter issued by the global lender’s Dhaka office

Sheikh Abu TalebStaff Correspondentbdnews24.com
Published : 1 Dec 2022, 09:15 PM
Updated : 1 Dec 2022, 09:15 PM

A high-level International Monetary Fund or IMF delegation would like to sit with Bangladesh officials in January to thrash out the details of an agreement that will ensure the country receives a total of $4.5 billion in financial assistance as rising food and fuel prices globally put a serious strain on the emerging economy. 

The delegation, headed by IMF’s Deputy Managing Director Antoinette Monsio Sayeh, has proposed a four-day trip to Dhaka from Jan 14 next year for the talks in a recent letter issued by the global lender’s Dhaka office, confirmed Bangladesh Bank spokesperson Executive Director GM Abul Kalam Azad. 

The IMF office in Dhaka also requested the Ministry of Finance to ensure high-level protocol for the delegation in the letter as the delegation would like to call on Prime Minister Sheikh Hasina, Finance Minister AHM Mustafa Kamal and central bank Governor Abdur Rouf Talukder. 

Earlier this month, economist Rahul Anand, who led a staff-level IMF mission which sat with multiple government departments and ministries from Oct 26 to Nov 9, at a press briefing announced that they had reached a staff-level agreement with the Bangladesh authorities to “support the authorities’ reform policies under a new 42-month ECF/EFF arrangement of about $3.2 billion, and a concurrent RSF arrangement of about $1.3 billion.” 

The 42-month agreement says that funds will be divided between the Extended Credit Facility or ECF, Extended Fund Facility or EFF, and the Resilience and Sustainability Facility or RSF and the funds will come at an interest of 2.2 percent. 

Economist Rahul said the RSF will expand the fiscal space to finance climate priorities identified in the authorities’ plans, “including by catalysing other financing, and reducing external pressures from import-intensive climate investment”. 

“The staff-level agreement is subject to IMF management approval and the Executive Board’s endorsement, which is expected in the coming weeks,” he said. 

At the same news conference, Mustafa Kamal said the Washington-based global lender will disburse funds in seven tranches until 2026 and the first instalment will be available in Feb 2023. 

"We’re going to get the IMF loans as requested. They [the IMF] attached the necessary conditions which we ourselves initiated," he said. 

On conditions of the loan, the minister said reserve management, inflation and reforms to ensure good governance in the financial sector were the issues most discussed during the staff-level mission’s visit. 

In reply, the finance minister stressed that Bangladesh was already working on amending the Bank Company Act. “There was a delay in implementing the VAT law, but it will be done. The process to form asset management firms is ongoing.” 

Kamal hinted at keeping the 9 percent cap on banks’ lending rates. “It’s my idea. I own it. No business would be able to survive without this.” 

During the talks, the central bank had to explain the method of calculating the foreign exchange reserves to the IMF after the global financial institution questioned the calculation that makes the number appear bigger than under the agency’s latest manual. 

Bangladesh’s approach to the IMF comes as neighbouring Sri Lanka and Pakistan have also sought assistance from the global lender after being hit hard by inflation, dwindling foreign reserves and subsequent political upheaval.

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