The main reason for delaying the IMF installment is an attempt to cover up

Staff Reporter

The fourth installment of the International Monetary Fund (IMF) loan, part of a $4.7 billion program, has been delayed. The IMF was initially scheduled to discuss the disbursement on March 12, but the meeting has now been postponed until June.

Economic Advisor Salehuddin Ahmed stated that Bangladesh proposed the delay, and the IMF agreed. He emphasized that the country’s economic indicators, including the current account, financial sector, and remittances, are positive, allowing the government to delay the disbursement. However, the Chairman of the National Board of Revenue (NBR) recently cited a dollar shortage as a reason for difficulties in settling import bills.

Ahmed further explained that Bangladesh does not accept loans without conditions, but instead determines loan terms based on national needs. The government decided to wait for both the fourth and fifth installments to be approved together in June. However, IMF’s statement on its website indicates that Bangladesh needs to fulfill 33 new conditions by June 2025 to qualify for the next two installments.

Since the program began on January 30, 2023, Bangladesh has received about $231 million in three installments, and now awaits the fourth installment of $645 million, which is expected to be disbursed alongside the fifth installment in June.

Sources revealed that in the first two quarters of the fiscal year 2024/25, Bangladesh’s revenue collection fell short by 60,000 crore taka. This has raised concerns within the IMF about Bangladesh’s ability to repay its loans, leading the IMF to propose a VAT hike on some goods and services in December 2023. However, the government withdrew the VAT hike due to public backlash. Experts suggest that these factors contributed to the delay in the fourth installment.

The conditions for receiving the fourth installment include strengthening revenue collection, tightening monetary policy to control inflation, implementing a fully market-based exchange rate, and ensuring green growth policies to address climate change. The IMF has expressed dissatisfaction with the progress made on exchange rate and revenue collection reforms.

After completing its third review in early February, the IMF postponed the disbursement of the fourth installment from February 10 to March 12, with approval now expected in June. During its visit to Bangladesh from December 4-18, 2023, the IMF mission reviewed the progress of previous loans and reached an agreement on a new $750 million loan to help manage foreign exchange supply and financial sector reforms. If approved by the IMF board, the total loan amount will increase to $5.3 billion.