Bangladesh may receive US$650 million by December in a second tranche from a $4.7 billion worth of IMF loan package, as hectic negotiations on the prerequisites yield positive signals.
The visiting staff mission of the Washington-based global lender will sit with the Finance Division for a wrap-up discussion today (Thursday) where the team could give positive hints to the government on the upcoming tranche, a Ministry of Finance (MoF) official said Wednesday.
The expected $650 million worth of programme loan will give a cushion to Bangladesh government amid the depleting foreign-exchange reserves, counted at $21.06 billion as per BPM6 method, at the end of September, down from $36.47 billion a year ago, Bangladesh Bank (BB) data showed.
Meanwhile, remittance and export earnings of the country are also declining compared to imports month on month, resulting in a further pressure on the foreign- exchange reserves in the coming months.
"The Finance Division, the central bank and other government agencies have already sat with the visiting IMF mission. The mission will conclude tomorrow. They will sit with us at the Finance Division tomorrow where we are expecting positive indications," a senior MoF official told the FE on Wednesday.
Besides, a Bangladesh delegation had also discussion with the International Monetary Fund (IMF) fiscal department, Asia-Pacific regional department, and Deputy Managing Director Antoinette Monsio Sayeh in Morocco last week during the World Bank-IMF annual meeting.
'All the IMF executives are happy with Bangladesh's macroeconomic management and lauded the overall economy even during this global turmoil," says a MoF official who was one of the Bangladesh delegation members to the Bank-Fund meet.
"We've fulfilled almost all the reform conditions except a couple including the foreign-currency-reserve benchmark. But we are on track to comply with the belated one too. The IMF is convinced with our measures being taken for the remaining reform works," he adds.
The IMF staff mission is likely to set a lower target for foreign-currency reserves at the end of December and in June next year considering the current macroeconomic situation home and abroad, another MoF official said.
The central bank adopts crawling peg method to manage the exchange rate, he added.
Crawling peg is a system of exchange-rate adjustments in which a currency with a fixed exchange rate is allowed to fluctuate within a band of rates, and in so doing, the method fully uses the key attributes of the fixed exchange regimes, as well as the flexibility of the floating exchange-rate regime.
Currently, the IMF mission, led by its Economist of the Asia-Pacific Department Mr Rahul Anand, is visiting Bangladesh to assess and review the macroeconomic conditions and the reforms being implemented.
Before and after receiving the first $476.2-million tranche in February this year, Bangladesh took several steps to reform the structure of its financial sector and its policies, including raising the price of power and gas and cutting subsidies at their recommendation.
Meanwhile, the government is searching for such budget-support credits from different other development partners to prop up its depleting international reserves.
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