To cut the present deficit in our economy, the Government aimed to borrow USD 470.00 crore from International Monetary Fund (IMF) for the outgoing fiscal year. The IMF imposed about 38 reforms on Bangladesh’s financial sector as a condition for receiving this loan. Among the requirements, the topmost priority is the revocation of interest rate limits by banks, the market-driven dollar rate, and the maintenance of the fuel price at the international price every time. Prominent economists express that such conditions in the present economic situation would be detrimental, especially for the lower-income groups in our country.
IMF will provide the loan amount in seven installments by 2026, but government reforms to Bangladesh’s financial sector must be implemented by then. The loan’s interest rate will be 2.2 percent, but Bangladesh won’t have to pay any interest rate for the first installment. Time will tell us what will happen.
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Here we know about the IMF conditions for loans we have to initiate in the loan phase (2023-2026). Bangladesh must meet the following IMF requirements between 2023 and 2026 to qualify for loans.
IMF conditions for loans to be fulfilled in 2023:
- Tax to be collected .50% Additional of GDP.
- Risk Management unit to be formed in VAT and Excise duty Department within December-2023.
- Information regarding Rescheduled and Classified loans will be included in Annual Financial Resilience Report.
- Formulation of Experimental action plan for Risk-based loan supervision.
- Amended Bank Company & Financial Company Act to be presented in the parliament.
- Environment & Climate friendly sustainable purchase policy and action plan formulation.
- Have to introduce a Corridor system for interest rates.
- Incorporation of Market based currency exchange for all types of foreign currency.
- Accounting of foreign currency reserves will maintain according to formula set by IMF.
- Time-based system to be formulated for determining fuel price.
- Finalize the plan for decreasing sales of Sanchayapatra.
- Introduction of Singe Account policy for depositing government income in the National treasury.
- Disclosure of Yearly and quarterly reports of GDP.
- Bank and Financial Institutions will formulate policies for Environmental Risk Determination policy for financing.
Conditions to be fulfilled in 2024:
- Formulation of Mid-level strategy for treasury within June-2024.
- Policy formulation for Compliance with tax regulations.
- Set out the work for reducing tax rebates.
- Initiative for collection of Tax .50% Additional of GDP.
- Disclosure of the list of Bank’s bad properties according to Basel-III.
- Ensure the implementation of action plan for Risk-based loan supervision.
- Amended Bankruptcy act & Money Loan Court Act, 2003 (popularly known as Artha Rin Adalat Ain) to be presented in the parliament.
- Disclosure the information regarding the risk of treasury of Government owned Company, Government Guarantee and PPP related risk.
Conditions to be fulfilled in 2025:
- Reducing tax rebate.
- Initiative for collection of Tax .50% Additional of GDP.
- Implementation of Mid-level strategy for treasury.
- Implementation of Policy for tax regulations Compliance.
- Accomplishment of a Time-based system for determining fuel price.
- Maintain harmony in fuel price.
- Increase the proficiency of Social Safety programs scope and distribution system.
- Reduce classified loans and continue the initiative for inadequacy of business capital.
- The accomplishment of risk-based supervision system.
- Amended Negotiable Instrument Act to be presented in the parliament.
- Continue the trend of reducing the sale of Sanchayapatra.
- Disclosure of the information of 50 Government owned agency.
- Continue the Central bank policy regarding the management-oriented change in interest rates.
- Increase the Central Banks ability to power implementation.
Conditions to be fulfilled in 2026:
- Reducing tax rebate.
- Accomplishment of the initiative for collection of Tax .70% Additional of GDP.
- Implementation of Mid-level strategy for treasury.
- Application of Policy for tax regulations Compliance.
- Maintain harmony in determining fuel price.
- Increase the number of beneficiaries of Social Safety programs.
- Continue the initiative for Reduction of classified loans and inadequacy of business capital.
- Continue the bank supervision.
- Sector wise Strategy will be taken for Financial Sector.
- Continue the Central bank policy regarding management-oriented change in interest rate.
- New policy formulates for Green Bond.
Even though these IMF conditions for loans are hard to implement in the current economic situation, they are not impossible. We have to pay something to get something, and it is vice versa. We have to contend with some natural hindrances such as price hikes, temporary inflation, devaluation of money, etc. Nevertheless, we do not have an alternative at the moment. We should work together to overcome the present economic crisis and ensure our country’s sustainable development.
Source: Prothomalo.