Reforms under IMF programme to be phased in - Finance minister says

Reform programmes under the International Monetary Fund’s (IMF) new loan programme will be implemented gradually, taking into account the country’s political realities, Finance Minister Amir Khosru Mahmud Chowdhury said yesterday.

No major change is possible overnight, and the IMF has expressed its agreement on this matter, he said.

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The minister made the comments while talking to journalists at his office at the secretariat after a meeting with the visiting IMF delegation in Dhaka.

He said the IMF delegation has shown respect for the government’s financial reforms and political accountability.

A fact-finding mission led by Ivo Krznar, the IMF’s mission chief for Bangladesh, came to Bangladesh and held discussions with the Bangladesh Bank, the finance ministry and other relevant agencies.

Discussions were held with the IMF regarding the foundation and sequencing of Bangladesh’s upcoming new programme, as well as the overall aspects of the policy, according to a press release issued by the finance ministry.

Khosru said the foundation on which the new programme with the IMF will operate has been clarified, and both sides have fully agreed on the proposed framework.

He said that, considering the country’s overall economic situation, the changes will be implemented progressively based on the priority of the reforms needed. The IMF has agreed to this principle of sequencing.

Furthermore, the IMF has recognised the responsibility and accountability of a political government in ensuring public welfare.

Economic decisions will be taken while keeping the interests of the country’s people intact, he said.

The minister said the IMF delegation expressed satisfaction with the visible progress made during the current government’s four-month tenure in financial sector reforms, the development of the stock and capital markets, and revenue collection.

For the first time in the country’s history, tax collection within just four months was highlighted as a major achievement. Positive discussions were held regarding the government’s proposals to further increase the tax-to-GDP ratio by maintaining this positive trend.

Regarding subsidies, Khosru clarified that specific details or conditions have not yet been discussed.

The discussions were primarily focused on creating the core foundation of the new programme. All matters will be taken up later during detailed discussions.

He further said that the discussions are an ongoing process. The next round of discussions will take place during the annual meetings of the World Bank and the IMF in September or October.

The IMF is satisfied with the current government’s reform-oriented performance, and the upcoming new programme will be finalised on this foundation.

On Monday, representatives of the visiting IMF mission met with the heads of several Bangladesh Bank departments, including the monetary policy department, research department, debt management department, bank resolution department, and foreign exchange and policy department.

Officials of the central bank said that the IMF mission has sought details from the Bangladesh Bank on the total amount of special liquidity support extended to weak banks so far.The IMF also requested information on the conditions attached to the support, the extent to which recipient banks have complied with those conditions, the status of repayments, and the reasons behind the liquidity crisis at Islami Bank, as well as the measures taken to address it.