New govt sincere about reforms despite war-linked difficulties

The International Monetary Fund (IMF) finds the new Bangladesh government "sincere" to carry forward the Fund's lending programme and conduct the reforms pledged by its predecessors while seeking assistance for restoring macroeconomic stability.
"It is a new government, but they are making good-faith efforts to address the issues we raised, even as they contend with the energy shock owing to the war in the Middle East," Krishna Srinivasan, IMF's Director of the Asia and Pacific Department, told The Financial Express in an interview.
"We can talk more during the Spring Meetings," he said after meeting with a number of dignitaries on Tuesday in Dhaka.
Mr Srinivasan and his team met the Prime Minister, the Finance Minister, and the central bank Governor on the day to secure reconfirmation of commitment from the new government on economic reforms tagged to its lending package.
"We had very productive discussions," he said in reply to a Financial Express query.
"I emphasised the areas where we need to see greater progress as part of the IMF-supported programme," said Mr Srinivasan when asked about what message the IMF team placed to the government.
Finance Division officials say as the commitment is secured from the government high-ups, an IMF loan-programme-review mission will be dispatched to Bangladesh late April.
Before that the two sides will also have thorough discussion on the sidelines of the week-long Spring Meetings of the IMF and the World Bank Group (WBG) in Washington, DC, during the third week of next month.
The IMF, which extended a total of US$5.5 billion in loan to support Bangladesh's economy to accomplish stability, last time in June last year approved and subsequently released some $1.3 billion in two tranches together.
However, since then, the IMF had declined to launch talks on next tranche of the credit with the then interim administration until a political government assumes office.
The release of loan tranches ultimately is facing delays by one year following Bangladesh's repeated failure on prior actions and IMF's concern on securing commitment from a political government.
The fourth and fifth tranches of the credits were expected to be available in February and May last year respectively. However, they were released together in June after overcoming the long deadlock.
Now the IMF is expected to release some $1.3 billion in two tranches together, preferably by this June, though some officials say the government expects an early release of the funds to help Bangladesh pay higher energy bills caused due to war in the Middle East.
The Fund originally granted $4.7-billion in loan to Bangladesh in January 2023 amid macroeconomic instability stemming from the Covid-19-related volatility and war in Ukraine.
The macroeconomy of the country began to be destabilised as export earnings fell, remittance inflow tumbled, and foreign-currency reserves depleted.
Thereafter, the government turned to the IMF for credit support and the lender came up with reform proposals to help revive the economy of the country.
The loan was scheduled to be given in seven instalments by May 2026. Last June, the loan amount was increased by another sum of $800 million and the programme tenure was extended to December 2026.
Until now, Bangladesh has received $3.595 billion under this lending package.

syful-islam@outlook.com