After several days of negotiations and government stand for loan without strings, the International Monitory Fund (IMF) came down to easier terms.
The International Monetary Fund (IMF) has agreed to sanction a loan of $4.5 billion to Bangladesh on comparatively easier conditions for the strong stance of Prime Minister Sheikh Hasina, and her government as well.
Besides, the IMF authorities have agreed to sanction the loan amount for Bangladesh after the IMF was satisfied with the existing overall condition of the country, including its capacity to repay loans on time.
The government and visiting team of the IMF on Wednesday reached a staff-level agreement to support Bangladesh's reform policies with a loan of $4.5 billion.
The IMF team held meetings with Finance Minister AHM Mustafa Kamal, Bangladesh Bank Governor Abdur Rouf Talukder, Senior Secretary of the Finance Division Fatima Yasmin, and other senior government and Bangladesh Bank officials. The team also met with representatives from the private sector, bilateral donors, think tanks, and development partners.
Before the agreement between Bangladesh and the IMF officials was signed, Road Transport and Bridges Minister Obaidul Quader, also the general secretary of the ruling Awami League, on Wednesday said that the government was keen to take the IMF loan but definitely not on any "hard conditions."
"The effect of global crises has now permeated to the national level, as a result of which pressure on the country's foreign reserves is increasing. Therefore, the need for foreign currency inflow is there," he said on Wednesday while speaking with the press at the Secretariat in Dhaka.
"In this situation, we are interested in taking the IMF loan the government has requested, but not on any hard conditions," he said, adding that discussions are underway in this regard.
The general secretary of the ruling party met journalists on Wednesday at a press conference held at the Road Transport and Bridges ministry conference room at the secretariat.
He said that the government would take the rational conditions only.
Replying to a question, Obaidul, also the road transport and bridges minister, asked the journalists to apply common sense of what the hard conditions could be.
According to officials concerned, before the loan agreement, a delegation of the IMF, since its arrival in Dhaka to discuss the $4.5 billion loan sought by Bangladesh, extensively visited all the government offices concerned and held a series of meetings to take stock of the country's macroeconomic situation, its internal and external finance and fiscal policies.
It inquired about Bangladesh's preparation for LDC graduation, measures to check wastage in government expenditure, and plans to phase out subsidies in energy.
The sources said that apart from hundreds of questions put forward to nearly a dozen government offices and regulatory bodies, there was a common query: Why is Bangladesh asking for loans despite its impressive economic performance over the years?
They said the loan would be made available at the same rate for three fiscal years, including this one and the next two.
Of all the queries from the IMF, the most were reserved for the National Board of Revenue (NBR), who got 38 questions. The global lender asked the board a range of questions, from the VAT (value-added tax) system, VAT exemptions, how tax holidays are given and how capital losses are treated.