IMF approves disbursement of US$140.4mn for BangladeshNew Age Online
The Executive Board of the International Monetary Fund (IMF) has approved the disbursement of about US$140.4 million for Bangladesh under its Extended Credit Facility (ECF), reported UNB.
The IMF Executive Board also completed the third review of Bangladesh’s economic programme under a three-year arrangement supported by the ECF on November 27, said an IMF release on Monday.
‘The Executive Board’s decision enables the immediate disbursement of an amount equivalent to SDR 91.423 million (about US$140.4 million) to Bangladesh,’ it said.
This would bring the total disbursement under the arrangement to about US$561.4 million (SDR 365.692 million).
The three-year ECF arrangement for Bangladesh was approved by the Executive Board on April 11, 2012 for a total amount worth about US$982.5 million (SDR 639.96 million).
After the Board discussion, Naoyuki Shinohara, deputy managing director and acting chair, said: ‘The progress on macro-stabilisation and structural reforms has been strong under Bangladesh’s policy programme, supported by the Extended Credit Facility.’
International reserves have risen and underlying inflation is moderating. The progress has also been made in lowering subsidies, raising development spending, improving public financial and debt management, and strengthening financial supervision, Shinohara said.
However, shutdowns and uncertainty associated with the upcoming elections, an attendant slowdown in growth, and an expected transition in the garment sector to higher costs and upgraded labor and safety standards, pose challenges ahead, Naoyuki Shinohara said.
‘To manage them, it’s important to persevere with a strong policy framework in the run-up to national elections and beyond.’
Fiscal policy should remain prudent, while providing space to raise public investment and social-related spending.
The official said further reforms to modernise the tax system and generate additional resources for development spending over the medium term are critical, with implementation of the new value added tax a priority. ‘Public financial management needs strengthening, focused on treasury cash management, state-owned enterprise financial reporting, and debt management practices.’
Naoyuki Shinohara said restrained monetary policy has curbed inflationary pressures and supported reserve accumulation. ‘The stronger external position could allow scaling back foreign exchange intervention while continuing sterilization efforts.’
The IMF official said Bangladesh Bank should fully utilise its enhanced supervisory powers to bolster financial stability. ‘The programme for reforms at the state-owned commercial banks should be firmly advanced, backed by recapitalisation.’
Naoyuki Shinohara said reforms to achieve sustained and inclusive growth should aim at further removing critical infrastructure bottlenecks, while streamlining the trade regime and foreign exchange regulations to improve the business climate.
‘Advancing initiatives to strengthen labor and garment factory safety conditions are also critical, while the targeting of social safety net programs needs to be further improved.’
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