IMF agrees to give B'desh $1b credit

Friday, 22 October 2010 03:31 -     - {{hitsCtrl.values.hits}}

DHAKA: The International Monetary Fund (IMF) has agreed in principle to lend Bangladesh $1 billion under its Extended Credit Facility (ECF) programme. If finalised, it will be the fourth lending arrangement with the IMF after previous three in 1987-90, 1990-93 and 2003-07. Bangladesh last received the IMF lending in 2007 under poverty reduction and growth facility (PRGF) programme. The IMF had wanted to extend the PRGF, but could not do so due to huge opposition from different sections, including the media.

“A big mission of IMF comprising at least 20 officials will arrive in Bangladesh by next week to work on it,” Bangladesh Bank (BB) Governor Atiur Rahman told The Daily Star yesterday

The mission will work here for two months to prepare a proposal in this regard, Rahman said.

Officials in the finance ministry and the BB confirmed that both sides agreed in principle about the loans during the recently concluded meetings of the World Bank and the IMF in the US.

The loans will be given to the central bank. Later, the government will have to sign a deal with the BB for utilisation of the fund.

Officials said there is a difference between the parties on the use of the funds.

IMF wants to lend the money for budgetary support, while the government wants to use it to support the balance of payments.

According to the IMF, the ECF provides financial assistance to countries with protracted balance of payments problems.

The ECF was created under the newly established Poverty Reduction and Growth Trust as part of a broader reform to make the Fund’s financial

support more flexible and better tailored to the diverse needs, including in times of crisis.

The ECF succeeds the PRGF as the Fund’s main tool for providing medium-term support to low-income countries