Bangladesh doesn’t need a bailout, official says as govt tapped IMF for loan

He says such a description of the government’s request for an IMF loan is ‘unwarranted and hurts self-esteem’

Published : 27 July 2022, 06:02 PM
Updated : 27 July 2022, 09:02 PM

Bangladesh's conditions are not bad enough to warrant a bailout, a senior official has said, as the government has made a formal request to the International Monetary Fund for a loan.

Ahmad Kaikaus, principal secretary to the prime minister, said Bangladesh’s foreign currency reserves are enough to pay the import bills for more than five months. But it still applied to the IMF for soft-term loans for budget support and to cut the balance of payment deficit.

"No such situation has been created in Bangladesh for seeking a bailout,” he told reporters at the Prime Minister’s Office on Wednesday, condemning reports by some media that used the word “bailout” to describe the government’s request for a loan from the IMF.

"I've strong reservations about the word bailout,” he said, adding that such a description of the government’s request was “completely unwarranted and it hurts our self-esteem”.

Kaikaus said the government took budget support from the World Bank, ADB, JICA and IMF during the COVID-19 pandemic and none raised a question at that time.

The government, according to him, received $732 million in support for the balance of payment from the IMF during the pandemic and is already repaying the debt.

"So, it won't be bad if we take such kind of loan support from the IMF under the present global context. It won't be an offence and we can seek such support by holding our head high.”

The government usually gets four types of support from the IMF and discussions on the assistance are held every year, according to the secretary.

"This time, a proposal has been sent to them [IMF] for the balance of payment and budgetary support. The proposed support can be used in mitigating climate change impacts.”

“Since our loan repayment capacity has increased," continued Kaikaus, "we're now getting budget support instead of only project-based loans. This means that we can utilise the funds as we please. This will be good for us."

He also refuted media reports that the government will have to pay charges before production starts at a power plant of Adani Group of India. No rent and tariff will be given before electricity is generated, he clarified.

Bangladesh, however, will need to pay the capacity charge for the power plants, which Kaikaus said is a system used by all countries to woo foreign investment.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher