Condition for PRGF Tranche
IMF for further fuel price hike
Banks still cannot open LCs for petroleum import
Staff correspondent
The International Monetary Fund (IMF) may not disburse the $80 million sixth tranche of its anti-poverty loan if the government fails to take concrete steps to further reduce the losses of the Bangladesh Petroleum Corporation (BPC).Jonathan C Dunn, resident representative of the IMF, yesterday informed Finance Minister M Saifur Rahman about the Fund's position regarding the Poverty Reduction Growth Facilities (PRGF) tranche scheduled in July. The government raised petroleum prices last month by 10 percent for kerosene and diesel and by 30 percent for octane. But the IMF observes this price hike is very nominal compared to the loss of the BPC due to subsidising petroleum prices. "The IMF has asked for reducing the BPC loss either by raising petroleum prices or by other alternatives," Saifur told reporters yesterday. "But we can't afford to increase price further. So we are considering subsidising the BPC from the budgetary block allocation. Alternatively, we can manage funds from less priority projects." He mentioned that the recent price hike did not solve the liquidity crisis of the BPC and the banks still cannot open letters of credit to import petroleum. The IMF representative also expressed the Fund's dissatisfaction over the slow pace of tax and banking reforms.
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