The International Monetary Fund (IMF) approved a credit facility of US$ 4.7 billion for Bangladesh on Monday.
The credit facility has been approved under the Extended Credit Facility (ECF), Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) arrangements. This credit facility is to be disbursed under a 42-month programme.
In the current economic scenario, this is a sigh of relief when there is a shortage of foreign exchange, and is expected to help maintain the macroeconomic stability of Bangladesh.
DCCI President Barrister Md. Sameer Sattar said that the approval of this loan on the part of IMF is a sign of Bangladesh’s credit worthiness and economic strength.
Barrister Sattar said that it is noticed that IMF’s loan to Bangladesh is tied with some institutional and policy reform conditions. This includes reforms in the financial sector, policy framework, energy sector, public finance, local revenue generation, investment to climate resilience, among other things.
However, he hailed the timely decision of IMF, as this credit facility will assist Bangladesh in facing the current economic challenges in a structured manner.
DCCI President further states that, as an immediate impact, the loan would stand as a relief due to the increase in our reserve.
The loan will give the Government an option to consider withdrawing some rigid import conditions, i.e., the conditions on opening LCs. The loan will surely provide a relief to the businesses, considering the upcoming month of Ramadan and the growing need for essential commodities.
DCCI President believes that the Government has, meanwhile, endorsed and implemented some of the key reforms. For example, Barrister Sattar states that Bangladesh Bank has already taken some commendable initiatives in order to strengthen the financial sector.
This can be seen from the recent Monetary Policy Statement (MPS), which addressed that good governance between banks and financial institutions needs to be improved. The MPS has also relaxed the cap of interest rate of lending and borrowing, and is gradually moving towards a market-based, flexible and unified exchange rate regime.
Recently, the new Income Tax Act has been approved (at the Cabinet-level) which aims at increasing the tax-net, which will mobilize domestic revenue collection. The new Income Tax Act emphasizes on automation which resultantly will attract foreign investment.
Barrister Sattar further suggests that the Government should take immediate steps to reduce budget-deficits and increase tax-GDP ratio to cope with the challenges in the near future. However, there are other reforms which are being considered by the Government.
Barrister Sattar urges that the Government should continue to uphold the spirit of good governance and try to enforce the same across all major sectors.
He also urged the Government to be mindful of any conditions of the loan so that Bangladesh can stay ahead in the performance markers set by IMF.