"We told IMF that there are certain conditions that we will not be able to implement immediately. While the government has its own necessity to meet those conditions, it would do so at its own pace and not on the IMF's timeline."

— Salehuddin Ahmed

The International Monetary Fund has deferred the release of the fourth tranche of the $4.7 billion loan to June instead of March as Bangladesh could not meet some prior conditions.

Earlier in December last year, upon completion of the third review, Chris Papageorgiou, the chief of IMF's visiting staff mission, had said that the proposal for the fourth tranche would be submitted before the IMF executive board on February 5.

However, the multilateral lender shifted the initial board meeting for the fourth tranche, which is likely to be $645 million, from February 5 to March 12.

As per the latest development, the IMF might release both the fourth and fifth together in June, which could amount to more than $1 billion, upon fulfilling conditions.

Bangladesh could not fulfil the prior conditions related to the Bangladesh Bank and the National Board of Revenue as there has been disagreement between the government and the IMF over the issues.

"We will wait -- we requested IMF to release the next two tranches together in June," Finance Adviser Salehuddin Ahmed told reporters yesterday after attending the Deputy Commissioners' (DCs) conference in the capital.

Asked whether the deferral came from the IMF side, Ahmed said: "They supported it. We also told them that there are certain conditions that we will not be able to implement immediately."

While the government has its own necessity to meet those conditions, it would do so at its own pace and not on the IMF's timeline.

At present, Bangladesh's macroeconomic indicators are not looking bad, he said, citing the positive current account and financial account balances and growth in remittance.

"That is why we are not desperate to get loans from the IMF and the World Bank. Besides, getting funds from development partners is not begging as Bangladesh has to comply with various conditions," he added.

One of the issues could be that the government was supposed to take few tax-related measures to collect additional Tk 12,000 crore this fiscal year, said Zahid Hussain, former lead economist of the World Bank's Dhaka office.

While the government took measures to increase revenue collection, it walked back on the step, which might have displeased the IMF, he said.

Also, there could be some disagreements between the government and the IMF over separating tax policy and administration and also the exchange rate management.

"These could be the issues which are likely under discussion between the government and IMF at present."

The government should settle the issues through effective negotiations.

"Issues like VAT rate hikes are not politically feasible in the present context. However, there are some other conditions which the government could fulfil," he said.

The deferral of the fourth tranche might make it tough for the government to get budget support from the WB.

Besides, such delay could also negatively impact outlooks forecast by different international credit rating agencies, Hussain added.

So far, Bangladesh received $2.3 billion in three tranches under the programme.

"There are some conditions which we will not fulfil just based on their demands but achieve those in our way," he added.

He further said that Bangladesh's macroeconomic indicators are good to some extent, citing now the current account and financial account balances are positive while inward remittances have also been seeing a significant growth.

"That is why we are not desperate to get loans from the IMF and the World Bank," he added.

Earlier, the IMF staff mission led by Chris Papageorgiou visited Bangladesh between December 3-18 last year.

Upon completion of the visit, IMF in a statement said "We are pleased to announce that the IMF team reached a staff-level agreement with the Bangladesh authorities on the policies needed to complete the third review under the ECF, EFF, and RSF arrangements. The IMF's Executive Board will consider completion of the review based on the implementation by the authorities of prior actions."

Zahid Hussain, former lead economist of the World Bank's Dhaka office, said he assumed the loan release had been deferred because of disagreements over some issues.

He said one of the issues could be that the government was supposed to take few tax-related measures to collect additional Tk 12,000 crore in revenue by this fiscal year.

However, the government took measures to increase revenue collection but later stepped back which might have displeased IMF, he added.

Also, there could be some disagreements between the government and IMF over separating tax policy and administration and also exchange rate management, said Hussain.

"These could be the issues which are likely under discussion between the government and IMF at present," he added.

Hussain said the government should settle down these issues through effective negotiation so that the problems are resolved.

"Issues like VAT rate hike are not politically feasible in the present context. However, there are some other conditions which the government could fulfil," he said.

He said deferral of the fourth tranche might make it tough for the government to get budget support from the World Bank.

Besides, such delay could also negatively impact outlooks forecast by different international credit rating agencies, he said.

The $4.7 billion loan programme was approved by the IMF in January 2023. So far, Bangladesh has got $2.3 billion in three tranches.

During the last visit to Dhaka, the IMF staff mission upon request from the interim government agreed to provide $750 million additionally.