Bangladesh government is working to gradually implement almost all conditions of the International Monetary Fund (IMF) to get a US$4.5 billion loan from the Washington-based lender, to meet the foreign exchange crisis, said a senior official of the finance ministry on Monday.
As per the conditions, Bangladesh Bank (BB) will leave control of the Bangladesh currency’s exchange rate with the US dollar to the floating market.
The BB also includes allowing the private sector to import fuel and increasing electricity prices at the retail level, reports UNB.
Besides, a long-term plan will be made to make the prices of imported goods, including energy products, use-based and to increase the tax-GDP ratio. A decision has already been taken from the highest level of the government regarding the implementation of these conditions, said the official speaking on condition of anonymity as he is not authorised to talk to the media.
The IMF has suggested major reforms in the banking sector. However, the government is yet to take any major steps in this regard. Rather the government instructed the central bank to initiate a limited phase of the reform process.
Bangladesh has sought a loan of $4.5 billion from the IMF to deal with the global recession and the negative impact on the country's overall economy and the foreign exchange crisis. An IMF mission visited Bangladesh from October 26 to November 9 to discuss the loan issue.
At that time, the IMF team discussed with different ministries and divisions of the government and raised several conditions for Bangladesh to implement to be eligible for the much-needed relief.
Among these, some conditions have been implemented by the government before starting loan negotiations. The main condition of the IMF loan is the reduction of subsidies. In order to reduce the subsidy, the government increased the prices of fuel, gas, and fertilizers last August.
The IMF also called for an increase in electricity prices. As part of this, electricity prices have already been increased at the wholesale level. Now the process of retail electricity price or consumer level is under process. If it is hiked, a major conditionality of the IMF will be implemented.
Another condition of the global lender was to open the import of energy products. At present most of the fuel is imported by the government. As part of IMF conditions, the private sector got permission for LNG import.
In fulfilling the condition of the IMF, the government is formulating a policy to import energy, gas, and oil through the private sector, sources familiar with the development said.