Visiting IMF team to negotiate $1.0b loan under ECF

Nazmul Ahsan A five-member delegation of International Monetary Fund (IMF) arrived in Dhaka on Tuesday last to negotiate $1.0 billion loan under Extended Credit Facility (ECF), official sources said. The multilateral lending agency has made some queries to Ministry of Finance (MoF) about the real sectors, budget deficit, subsidies, public enterprises, monetary and financial issues and the external sector, a top official in the ministry said. The team, led by Deputy Division Chief, David Cowen, will stay in Dhaka for about two weeks. IMF's Country Representative in Bangladesh Eteri Kvintradze said the purpose of the visit is to negotiate the ECF credit facility. "We are in discussion to finalise $1.0 billion credit facility under the ECF," Eteri Kvintradze told the FE on Wednesday. "During the stay of IMF team in Dhaka, the team members will meet policy makers for finalising the deal," she added. Asked, Eteri Kvintradze did not specify any possible date in respect of releasing the proposed $1.0 billion fund for the country now under severe crisis in Balance of Payment (BoP) situation. However, experts said reaching consensus between the government and the IMF to forge agreement in getting the proposed fund would be a difficult task now for the government after the World Bank had suspended promised fund for Padma Bridge amid corruption allegation. "Things have become tougher in getting the ECF fund as the WB backtracked in disbursing the fund for Padma amid allegation of corruption," a top central banker told the FE on Wednesday. The visiting IMF team held discussion with Bangladesh Bank's top officials Wednesday, it is learnt. After borrowing $490 million from IMF's poverty reduction growth facilities (PRGF) scheme in fiscal 2003-04, the country again sought around $1.0 billion under ECF arrangement for four years (fiscal 2011-14). Officials at the MoF said the overall macro-economic situation of the country is not in a good shape. The BoP situation has deteriorated. The bank borrowing of the government is increasing alarmingly. According to the latest data, the government exceeded bank borrowing target fixed for the whole of the current fiscal year in mid-November causing liquidity crisis for scheduled banks. "We need ECF from the IMF to address the BoP crisis," a high MoF official said. The IMF made queries on government's future planning to reduce the power and petroleum subsidies, plan of reforms in the areas of tax, customs and value added tax, sources said. It has also made queries relating to the future plan of the government in downsizing the public subsidy in state-owned enterprises. The IMF has suggested an increase in bond and Treasury bill rates and changes in the country's fiscal, monetary and exchange rate policies in an effort to stave off "intensifying" macro-economic and financial risks , a senior MoF official said.