Anisur Rahman Khan :
When Bangladesh is desperately perusing to obtain International Monetary Fund (IMF) loan to keep its forex reserve healthy, it is depending on the total compliance with the conditions of the lender.
Generally the procedures take more than five months to get the final nod from the IMF board, experts said.
Meanwhile, Bangladesh’s Finance Minister AHM Mustafa Kamal wrote to the Washington-based multilateral lender’s Managing Director Kristalina Georgieva seeking financial assistance as balance of payment and budget support as well as to mitigate the effects of climate change on Bangladesh in the last month.
However, the IMF spokeswoman Huong Lan Vu said, “The IMF stands ready to support Bangladesh with this request.”
Bangladesh will get loan from the IMF only after both side’s consensus on policy understanding through negotiations, which would take some few months, two IMF’s former economists told The New Nation on Thursday.
“IMF wants to give loan to everyone, but through discussion after fulfilling its conditions,” Ex-IMF Economist Dr Ahsan H Mansur told this correspondent.
Normally IMF teams visit the concerned country to negotiate conditions regarding the loan that applied for, he said.
“A letter of intent is signed between the IMF and concerned country after the both sides agree to comply with the lender’s conditions. Then it will go to the IMF board for final approval,” Dr Ahsan H Mansur told The New Nation.
The IMF is yet to approve loan for Bangladesh, he said and added that the IMF team will visit Bangladesh to discuss the matter regarding their loan policy.
When asked how many days it will take to get the loan from the IMF, the Ex-IMF economist said, “It would take maximum one month in case of Bangladesh. It is not needed for five months to approve loan by the IMF as Bangladesh is not in the category. So, it can be expedited to get the loan from the IMF within one month. It is sure that IMF board approval is needed to get the loan.”
The IMF is always willing to help-but it doesn’t mean that the loan is approved, Ex-IMF economist Dr Reza Kibria said.
“IMF cannot give loans to any country without due process and a Managing Director can’t approve loan without board approval, the Ex-IMF economist told The New Nation.
“IMF holds its first board meeting one month after the loan proposal and if everything goes well, even if all the conditions are met, it takes at least five months to get the money,” he said.
Quoting some media reports regarding IMF loan, he said, the published news are false as a Managing Director is not the head of the institution and can’t approve loan.
According to Reza Kibria, “If the IMF loans money to a country, it examines whether it can return the loan and fulfill its conditions. So, the IMF wants an account of the country’s reserves because its money comes from different countries around the world. So, they don’t want to lend to anyone easily. The IMF has enough doubts about the current government’s reserves.”
Bangladesh has sought loan from the IMF’s new Resilience and Sustainability Trust (RST).
About three-quarters of the IMF’s membership –including Bangladesh — are eligible for RST financing.
To qualify for the RST, all countries would need a concurrent financing or non-financing IMF-supported program.
“The RST is expected to be operationalised in the coming months and IMF staff will work with the Bangladesh authorities during this period to design a program most relevant to its economic and social dynamics,” Huong Lan Vu said.
The amount of support has not yet been discussed and it will be part of the programme design discussions, she added.
The IMF thought that there are immediate challenges of Bangladesh that need to be dealt with in getting the loan.
