New deal with IMF may be delayed

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Shakhawat Hossain
Striking a new deal with the International Monetary Fund (IMF) on replacement of the poverty reduction growth facility (PRGF) is likely to be delayed as the country needs more time to settle the issue, sources said.
Such an intention of the caretaker government (CG) has been conveyed by its policy makers to the visiting IMF team that concludes its PRGF-exploratory mission today (Tuesday).
The main reason behind the delay is attributed to the prevailing unfavourable situation arising from flood, unemployment, high inflation and sluggish economic activities.
The country, however, cleared its position about sticking to the previous stance of striking a new deal with the Washington-based multilateral lending agency, sources added.
It is imperative for the country to enter into a new deal with the IMF under which the country will get its economy reviewed by the multilateral institution for attracting overseas aid, said a senior ministry of finance (MoF) official.
The country has embarked upon implementing 49 per cent of the Tk 265.00 billion annual development programme (ADP) in the current fiscal with the financial assistance of the lending agencies.
Without continuation of a new deal or extension of the PRGF that expired June last, it will be difficult for the country to get the release of the funds committed by the lending agencies to implement the ADP, the official pointed out.
According to the IMF resident representative Jonathan C. Dunn, there are at least three options available for possible future programme support to Bangladesh.
The first of these is a new PRGF arrangement.
The second is support through the PSI -- an instrument developed at the request of IMF member countries that are termed 'mature stabilisers' and that wish to benefit from a signal that their macroeconomic policies are appropriate while not availing themselves of IMF financial assistance.
The third option is engagement though the surveillance and Article IV consultation role that the IMF conducts with all 184 of its member countries.
Sources said the MoF held substantial negotiation with the visiting IMF mission to sign a deal on the PSI.
But it has to take more time to settle the issue following suggestions by the central bank.
Besides, sharp criticism of the forthcoming IMF deal by different quarters and a challenge in the High Court have prompted the MoF to take such a decision, sources added.
Earlier, the MoF sought suggestions on the new IMF deal from the different government functionaries, including the central bank.