A fresh package of US$3.0-billion International Monetary Fund (IMF) lending to Bangladesh is fraught harder terms, particularly on power sector, which may make its receipt uncertain, officials say.
The visiting Bangladesh delegation to the World Bank-IMF annual meeting is set to sit with IMF's senior executives and request relaxing the conditions already shared with Bangladesh government, said Ministry of Finance (MoF) and Power Division officials Wednesday.
In one of the must-dos the IMF has told the government to ramp down the dues to the independent and rental power producers and bring the present cumulative outstanding into the level of June 2023.
Until June 2023, government debts in outstanding capacity charge to the IPPs and rental power producers were recorded at nearly Tk 360 billion, MoF officials said.
The capacity-charge payments-in foreign currency as per deals-to the Independent Power Producers (IPPs) and the rental power companies have been ballooning month on month as the government goes on purchasing electricity from them.
Although the government is paying the dues against the outstanding bills to the private-sector power companies for supplying electricity into the national grid every month, the total back pay is ballooning due to mismatch between buying price and selling price, a Power Division official said.
According to MoF account, the arrears to the IPPs and rental power plants had swelled to Tk 360.65 billion till August this year although the government paid Tk 38.08 billion in July-August period.
"Our delegation is now in the IMF headquarters in Washington, DC, for joining the IMF-WB annual meet. They would discuss the conditions of the IMF for getting its assured $3.0-billion loan," said a senior MoF official.
He deplores that since the deposed Sheikh Hasina government had signed power-purchase deals at higher rates with different local and foreign power producers, it has now become a "white elephant" for this interim government amid the lower base of revenue income and poor foreign- exchange reserves.
The unit rate of the electricity is so high that the government is forced to provide subsidies on the consumer prices, says a Power Division official.
Meanwhile, Bangladesh's revenue earnings as well as the foreign-exchange reserves are on a lower trajectory, resulting in the hefty outstanding to the power-generation companies, he adds.
Another MoF official says the Bangladesh government had a plan to repay a higher amount of arrears to the private power producers than it had done before after getting expected $1.0 billion worth of budgetary support from the World Bank.
Besides, the MoF could issue bonds through different commercial banks again to the IPPs for paying their outstanding capacity charges.
The government has already issued bonds worth some Tk200 billion through some commercial banks to repay the arrears to the IPPs, MoF official has said.
Meanwhile, the World Bank has recently assured the interim Bangladesh government of providing $1.0 billion worth of budget-support credit to bankroll reforms in the energy and power sector.
The MoF official says the Bangladesh delegation will place the repayment plan, for the IPPs and rental power producers, before the IMF executives in the Washington meeting.
"We will request the IMF for relaxing its terms and conditions for the assured $3.0-billion loan. If the IMF allows Bangladesh government, then the outstanding can be repaid properly. And we can get the expected budget support from the global lender, IMF," the MoF official says.
Meanwhile, the IMF had already confirmed $4.7 billion worth of budget support to cushion Bangladesh's struggling economy in January 2023 and disbursed the first tranche worth $447.8 million.
The Fund also released a second tranche worth $1.115 billion from its $4.7-billion package loan in June last.
Headed by Finance Adviser Dr Salehuddin Ahmed, the Bangladesh delegation is now in Washington, DC, attending the IMF-WB annual meet that ends on October 26.
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