BD to urge IMF to speed up $4.5b loan

Bangladesh is likely to request the International Monetary Fund (IMF) to expedite confirmation of its US$4.5 billion loan, assured for disbursement in next three years, officials said on Friday.

A Bangladesh delegation would urge the IMF officials for confirming the loan during the IMF-World Bank (WB) annual meeting in Washington next week, they also said.

Finance Minister A H M Mustafa Kamal is expected to lead the team. Bangladesh Bank Governor Abdur Rouf Talukder, the Ministry of Finance (MoF) secretary, and the Economic Relations Division (ERD) secretary along with some other high officials will accompany him in the meeting.

The meeting will take place at the IMF-WB headquarters in Washington on October 10-16.

In July, the government sought the budgetary support from the IMF to minimise the balance of payment (BoP) gap, which soared in recent months.

"The Bangladesh delegation members will meet the IMF high officials, including deputy managing director. They will request the IMF for confirming the loan," said a senior MoF official.

The country is likely to receive the IMF-assured $4.5 billion loan in three years - $1.5 billion in each year.

"Three months from the official request for the loan have already passed. Now we want to see a visible outcome of the request. We expect the first tranche of the assured budgetary support from the IMF within this fiscal year."

The delegation would also meet high-level executives of the IFC, MIGA, WB, AIIB and IDB on the sidelines of the IMF-WB meeting, he added.

Bangladesh's BoP is maintaining a big gap, as high import payments against lower export earnings hit the country hard amid the ongoing Russia-Ukraine war.

The government sought the IMF rescue package after Pakistan and Sri Lanka - following high import, especially of oil and gas, and fall in export - as the global economy slowed down.

The country is also searching for credit facilities from other sources, like the WB, the Asian Development Bank (ADB), etc, for minimising budget deficit in the coming days.

The IMF said Bangladesh was also interested in its new resilience and sustainability facility, which is aimed at helping the countries concerned face climate change challenges.

"The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on programme design as per the established policies and procedures of the fund," an IMF spokesperson said.

The multilateral funding agency offered the policy-support credit for financing deficit of the Tk 6.78-trillion national budget in the current fiscal year (FY), 2022-23.

Another senior MoF official said Bangladesh has also been affected by the Covid-19 pandemic and the recent global price push amid Russia-Ukraine war.

"So, we are trying to explore the budget-support facility from the IMF."

In the last talks, the IMF informed Bangladesh that the country could avail up to $6.8 billion worth of loans in next few years, if need arises, he added.

Earlier, the IMF had confirmed budgetary support worth $987 million, titled Extended Credit Facility (ECF), in April 2012 - to help restore macroeconomic stability, strengthen external position, and promote inclusive growth, as Bangladesh was hit hard by a global financial meltdown that started in 2007.

The IMF introduced short-maturity loans under the Resilience and Sustainability Facility (RSF), Extended Fund Facilities (EFF), and ECF.

The agency offered the RSF, as it wanted to help Bangladesh in the area of climate-change impact.

The RSF arrangements have a 20-year maturity and a 10.5-year grace period, during which no principal is required to be repaid.

The borrower country would have to pay nearly 1.539 per cent interest (SDRi+75 basis points) and 0.25 per cent service charge for receiving the IMF loan.

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