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IMF limits foreign loan to $775m by June 2014

Manjurul Ahsan

A file photo shows a man refuelling octane at a filing station in Dhaka. — New Age photo A file photo shows a man refuelling octane at a filing station in Dhaka. — New Age photo

International Monetary Fund has asked the government to limit borrowing from foreign sources to $775 million by June 2014 for fuel oil import by the Bangladesh Petroleum Corporation, officials said.
The condition has been tagged with further disbursement of the IMF’s $1 billion loan under Extended Credit Facility, an energy division official told New Age.
Meanwhile, out of the $1 billion, the IMF disbursed a total of $561.4 million in four tranches.
Now, the energy division official said, the outstanding loan of BPC to Islamic Development Bank is $1.124 billion.
When asked, the official said that the government would have to provide the rest of the money for fuel oil import as it had ‘no plan’ to increase the prices of the imported fuel oils immediately.
The energy division would send a letter to the finance division next week in this regard, he said.
According to the IMF ‘prescription’, the government will have to limit the borrowing from foreign sources to $975 million by March, 2013 which will have to be reduced to $775 million in next three months.
On the contrary, IMF has raised the ceiling of the government borrowing from foreign sources by $1.25 billion from $4.5 billion, which was set for a period until June next year, according to an IMF report released on December 6.
The energy division estimated that the BPC would need about Tk 287.5 billion or equivalent to about $370 million in subsidy for the import of 5.4 million tonnes the fuel oil in 2013.
The BPC, however, is making profit on sales of all petroleum products but diesel and kerosene.
An energy division official said that the BPC counts losses by less than Tk 10 for selling of a litre of diesel or kerosene. But BPC pays almost equal amount in taxes to the government exchequer, officials said.
Under the pressure from IMF, the government increased the price of diesel and kerosene by Tk 24 a litre and that of petrol and octane by Tk 22 in five phases between May 2011 and January 2013.
It has also unilaterally increased the price of furnace oil by Tk 36 a litre from Tk 24 to Tk 60 a litre in 2011.

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