The Dhaka Chamber of Commerce and Industry (DCCI) has said that the International Monetary Fund's (IMF) loan is a respite for Bangladesh's current economy.
The IMF approved a credit facility of US$4.7 billion for Bangladesh on 30 January 2023.
"The IMF approved a credit facility of US$ 4.7 billion for Bangladesh on 30 January 2023. In the current economic scenario, this is a sigh of relief when there is a shortage of foreign exchange, and the loan is expected to help maintain the macroeconomic stability of Bangladesh," DCCI President Barrister Md Sameer Sattar said in a statement issued on Wednesday.
He said that the IMF's credit facility has been approved under the arrangements of the Extended Credit Facility (ECF), Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).
This credit facility is to be disbursed under a 42-month programme.
The approval of this loan on the part of the IMF is a sign of Bangladesh's credit worthiness and economic strength, he said.
Barrister Sattar said it has been noticed that IMF's loan to Bangladesh is tied with some institutional and policy reform conditions.
The conditions include reforms in the financial sector, policy framework, energy sector, public finance, local revenue generation and investment to climate resilience.
The DCCI president hailed the timely decision of the IMF, as this credit facility will assist Bangladesh in facing the current economic challenges in a structured manner.
"The loan will give the government an option to consider withdrawing some rigid import conditions, i.e., the conditions on opening letters of credit (LCs). The loan will surely provide a relief to the businesses, considering the upcoming month of Ramadan and the growing need for essential commodities," he maintained.
Mr Sattar said that the government has endorsed and implemented some of the key reforms.
For example, he said, Bangladesh Bank has already taken some commendable initiatives in order to strengthen the financial sector.
"This can be seen from the recent Monetary Policy Statement (MPS), which addressed that good governance between banks and financial institutions needs to be improved," he continued.
The MPS has also relaxed the cap of interest rate of lending and borrowing, and is gradually moving towards a market-based, flexible and unified exchange rate regime.
Recently, the new Income Tax Act has been approved (at the Cabinet-level) which aims at increasing the tax-net, mobilising domestic revenue collection.
The new Income Tax Act emphasises automation, which resultantly will attract foreign investment.
The DCCI chief further said that the government should take immediate steps to reduce budget-deficits and increase tax-GDP ratio to cope with the challenges in the near future.
However, there are other reforms which are being considered by the government.
He said that the government should continue to uphold the spirit of good governance and try to enforce the same across all major sectors.
Mr Sattar also urged the government to be mindful of any conditions of the loan so that Bangladesh can stay ahead in the performance markers set by the IMF.