2nd parcel of IMF loans: All eyes on Dec 12 meeting

Bangladesh's proposal to get the second tranche of the International Monetary Fund's $4.7 billion loan has been placed for approval at the multilateral lender's board meeting slated for next week.

According to the IMF board meeting schedule, it will take place on December 12 where about $681 million in the second tranche is likely to be approved although Bangladesh did not meet two of the conditions.

The agendas which are likely to be discussed at the meeting are the 2023 Article IV Consultation and the first review under the Extended Credit Facility, the Extended Fund Facility and the Resilience and Sustainability Facility Arrangements.

Bangladesh has failed to attain two of the six quantitative targets set for the first half of 2023 by the IMF.

In October, an IMF mission team visited Bangladesh for two weeks after which the team reviewed the loan programme and placed Bangladesh's proposal before the IMF board.

Finance ministry officials said they were hopeful that the second tranche proposal would be approved in the IMF board meeting as they have explained to the IMF about Bangladesh's shortcomings in meeting two of the loan conditions.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said as Bangladesh's loan proposal has already been placed at the IMF board, it was unlikely for it to not get the approval.

The loan that Bangladesh is expected to get in the second installment could cover at least 15 days of spending from the foreign currency reserve.

One of the conditions that Bangladesh failed to meet is to maintain a minimum net international reserve (NIR) of $24.46 billion at the end of June.

The NIR target was missed by about $3 billion as the government had to delve into reserves to pay for essential imports of fuel, fertiliser and foodstuff.

The minimum tax revenue target was also missed: the government needed to collect at least Tk 345,630 crore in tax revenue in 2022-23. It finally raised Tk 327,664 crore, a shy of Tk 17,946 crore of the goal, according to a Finance Division report.

The IMF board approved the $4.7 billion loan on January 30. In the first tranche, Bangladesh received $447.8 million on February 2. The country is expected to receive the rest in another five tranches.