IMF loan talks underway: Finance Minister

Finance and Planning Minister Amir Khosru Mahmud Chowdhury today said that Bangladesh was holding discussions with the International Monetary Fund (IMF) over its loan programme and reform conditions, expressing optimism that all challenges could be resolved through mutual understanding.

“There are no major differences with the World Bank and the IMF on the fundamental aspects of Bangladesh’s reform plans,” he said, adding that discussions were underway on the timing and phasing of certain reforms.
The minister made the remarks while talking to journalists after attending the annual meetings of the World Bank and the IMF in Bangkok on Monday.

He said Bangladesh was working to finalise its Country Partnership Framework with the World Bank, which would provide a clear roadmap for development and economic cooperation in the coming years.

Referring to the current global situation, Amir Khosru said high international oil and gas prices had increased pressure on the energy sector. The government expected additional loan assistance from the World Bank, alongside its regular support, to address the growing expenditure burden.

Regarding the IMF loan programme, the minister said the government was discussing several specific issues with the organisation.

He stressed the need to implement reforms gradually, taking account of the country’s economic realities, rather than placing pressure on the government to carry out numerous reforms simultaneously.

He expressed confidence that the government and the IMF could reach a consensus through continued discussions.

On restructuring and recapitalising the banking sector, Amir Khosru said the sector might require around Tk 16,000 crore annually over the next five to eight years.

He said the government had made arrangements to allocate the necessary funds, but meeting the entire requirement through public financing alone would be difficult.

Against this backdrop, the International Finance Corporation (IFC) had expressed interest in supporting bank recapitalisation, while private equity investors had also responded positively, he added.

Assessing the current banking situation, the minister said concerns among depositors about banks had largely eased. Deposits were returning to banks, and net deposits were increasing, he said.

He also pointed out positive trends in the capital market, saying foreign investors were again showing interest in investing in Bangladesh.

On World Bank assistance for the energy sector, the minister said aligning domestic oil and gas prices with international market rates would create a need for subsidies to manage the resulting economic pressures.

He said the World Bank could provide assistance to address the situation. The government also hoped to secure the organisation’s support to establish a financial safety net for the next two to three years to overcome the economic shortfalls and pressures accumulated in previous years.

On revenue collection, Amir Khosru said the government’s measures to address the revenue shortfall were beginning to yield results.

“Income tax collection had already recorded growth of around 18 percent,” he said hoping that Bangladesh’s tax-to-GDP ratio would also increase over time.