Mahfuja Mukul : After receiving the second tranche of the International Monetary Fund (IMF) loan of $4.7 billion last December, Bangladesh is ahead of meeting the conditions of the third tranche. The government believes that all but one of the conditions that Bangladesh needs to fulfill by December last year (year 2023) have been fulfilled except for one.
According to sources in the Finance Department, the review mission is expected to come to Dhaka next March to waive off the third installment of the loan. The team will review the government’s performance against the target set by December 2023. If everything goes well, the third installment may be released next May.
According to sources from the Finance Department and Bangladesh Bank, it is not possible to keep the minimum Net International Reserve (NIR) as before. This is a mandatory condition. However, while the reserve target was not met, the revenue collection target was met, which was not met before the previous installment.
It is known that at the end of 2023, there is a target of at least $17.78 billion for Bangladesh’s reserves, but the reserves were less than $58 million of the target. However, Bangladesh Bank believes that the difference in reserves against the target may decrease.
Incidentally: The IMF Board approved the second tranche of $681 million to Bangladesh on December 12 last year despite failing to meet the minimum reserve and revenue collection targets.
In this situation, since the staff mission of the IMF had given the second tranche concession in June last year, the concerned government officials feel that there will be no problem in getting the third tranche concession due to the narrow reserve gap.
A waiver is usually sought from the IMF board if a borrowing country fails to meet a target. They also felt that there would be no need to seek waivers for reserve targets if other targets were met.
It is known that in December last year, the revenue target including NBR and non-NBR tax was set at Tk 1 lakh 43 thousand 640 crore. The government has already met the target.
Besides, another condition of the third installment loan is that the country’s budget deficit in December last year should not exceed Tk 90,520 crore.
According to the Ministry of Finance, the deficit was only Tk 12,402 crore till September last year. In this situation, the budget deficit is expected to remain within the maximum limit of the IMF.
Meanwhile, in addition to quantitative and indicative targets for loans, the IMF has some structural conditions. One of these is the adoption of phased price adjustments for petroleum products.
According to Finance Ministry sources, the first price adjustment will be made by next March. From then on, Bangladesh will adjust petroleum prices in line with the international market every three months.
Another structural condition is that the government will publish quarterly GDP data from December of the previous year.
It is reported that the Bangladesh Bureau of Statistics plans to release the first quarter GDP report by January after a delay in releasing the data due to the national elections.
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