New budget support of at least 4.5 billion dollars is expected from the World Bank and the International Monetary Fund (IMF) to implement the government’s reform program. Of this, $3 billion may come from the IMF and $1.5 billion from the World Bank. The issue of financing will be discussed at the World Bank-IMF annual meeting in Washington, USA from 21 to 26 October. Finance and trade advisor is leaving Dhaka tomorrow Monday to attend this meeting. A delegation led by Salehuddin Ahmed. This information is known from sources in the Ministry of Finance.
The delegation will sit with World Bank and IMF officials on the sidelines of the main event to discuss new financing mechanisms and reform conditions. At the same time, the Bangladesh delegation met with US Treasury Department, World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), International Finance Corporation (IFC), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Organization of the Petroleum Exporting Countries (OPEC). He will hold bilateral meetings with several other organizations on various issues.
The delegation includes Finance Adviser, Governor of Bangladesh Bank, Finance Secretary, Secretary of Economic Relations Department (ERD) and senior officials of the government. The Finance Advisor is scheduled to return home on October 29. Senior officials from the World Bank and IMF have pledged support for the government’s reform program after the interim government took over in August, pledging the necessary funding.
Finance Ministry officials told Samakal that about 3 billion dollars of budgetary support may come from the World Bank, IMF and ADB by next December for reform activities to ensure good governance in banking and other sectors. Lenders may impose several conditions for this. This may include issues related to revenue, government expenditure and information.
In addition to the $4.7 billion approved in January last year, another $3 billion loan may be approved under a separate IMF program. The previously sanctioned loan is to be disbursed in seven installments till 2026. In the meantime, Bangladesh has received 2.3 billion dollars in three installments. The terms and conditions of the new loan will be given in installments, the outline will be finalized in the meeting on the sidelines of the annual meeting.
A finance ministry official said the government is hopeful of getting more than 1.5 billion under two IMF programs this year, subject to approval by the IMF board in December. An IMF mission is likely to visit Dhaka in November to set reform conditions for the new fund and review existing lending programs.
The government expects the World Bank to provide a new loan of one and a half billion dollars in the current financial year. Of this, one billion is expected to be received by next December. The World Bank will provide $750 million to strengthen economic governance and reform programs. Another $250 million will be given to the Ministry of Finance, Bangladesh Bank, National Board of Revenue (NBR) and Bangladesh Bureau of Statistics (BBS) for capacity building.
The government expects $1.15 billion from ADB by the end of the current fiscal year. A program to strengthen economic management and governance will receive $650 million by December. The interim government has asked ADB for $1 billion for the banking sector and another $1 billion for the energy sector. Among these, significant progress has been made in obtaining $1 billion in the banking sector.
It is reported that World Bank and IMF loan conditions may include the separation of tax policy from revenue collection administration. The matter has been raised by lenders for a long time, but due to lack of interest from NBR, it cannot be implemented. Apart from this, the conditions for setting the current multiple VAT rates at a uniform rate, raising revenue and introducing a modern electronic VAT system may also be included. Apart from this, effective measures to reduce subsidy expenditure, autonomy of BBS and ability to publish information independently are also discussed.
