Bangladesh seeks record loans from International Monetary Fund

By Md. Kamruzzaman

DHAKA, Bangladesh (AA) - Bangladesh has sent a letter to the International Monetary Fund (IMF), asking for a record loan of $4.5 billion to address the prevailing financial crises and continue the ongoing development works, according to IMF and government sources on Wednesday.

In reply to a written query by Anadolu Agency, an IMF source confirmed Bangladesh’s interest in the loan.

On behalf of the IMF’s spokesperson, the institute’s communication officer Huong Lan Vu told Anadolu Agency on Wednesday that "Bangladesh authorities have expressed interest in the IMF’s new Resilience and Sustainability Facility to advance Bangladesh’s pioneering efforts to deal with climate change challenges and requested to start negotiations for an accompanying IMF program.”

She added: “IMF stands ready to support Bangladesh, and the staff will engage with the authorities on program design as per the established policies and procedures of the Fund.”

Without mentioning the amount of the loan, she clarified that the amount of support would be “part of the program design discussions.”

However, some local media outlets, citing anonymous sources of the Bangladesh government, mentioned the amount of the loan as $4.5 billion.

Bengali daily the Prothom Alo reported that to start a formal discussion over the loan, Bangladesh sent a letter to the IMF on Sunday.

“The letter did not mention any amount of the loan. But government’s Economic Relations Division sources said that Bangladesh is interested to have a loan of $4.5 billion for 3 years,” the report said.

- Terms and conditions

In an exclusive talk over the phone, Mashiur Rahman, the economic affairs advisor to Bangladeshi Prime Minister Sheikh Hasina, said his country must assess very steadily all terms and conditions of the loan from the IMF.

He added: “Bangladesh has not reached in any adverse situation that it must take a loan with any rigid condition that people are scared of and the stress of the countrymen to be mounted for.”

All concerned departments of the government in collaboration with each other would justify whether the loan is necessary for the country or not, Rahman noted, saying: “Only then, we will make the final decision.”

“Till now, I have no specific information whether Bangladesh has sent any letter to the IMF seeking the loan of $4.5 billion as has already been the headline of some newspapers,” Rahman added.

Underlining the critical conditions of some other Asian countries, the finance advisor added: “We have to work on whether we stabilize the foreign currency exchange rate and whether we will try to continue or reduce the balance of the deficit in the foreign account before finalizing the IMF loan.”

Meanwhile, Bangladeshi Finance Minister AHM Mustafa Kamal told local media on Wednesday that Bangladesh would start talks on a loan from the IMF.

“But Bangladesh will take the loan only if the conditions are favorable,” Kamal said, adding that the country’s $416 billion economy has been one of the fastest-growing in the world for years.

Underling the impacts of the ongoing Russia-Ukraine war on the global economy, he added that the rise in energy and food prices has inflated Bangladesh’s import bill and the current account deficit.

- Warns of debt trap

Senior analyst and former professor of economics at Dhaka University, Abu Ahmed, told Anadolu Agency that Bangladesh must keep in mind that if the country falls into any serious economic crisis like Sri Lanka, none would come forward to help.

Referring to the critical condition of another Asian nation of Pakistan, he added that Pakistan is taking new loans to pay previous loans.

“We must consider that from 2024, we will have to start returning loans with interest that the country has taken in the last couple of years in different mega projects and developmental works,” Ahmed said, adding that the country has taken the highest loans in the last three years.

According to official sources, the South Asian delta nation of 170 million has taken loans of above $5 billion in the last three years.

“It’s a huge challenge for the country to continue paying back those loans with interest. I think it would be the testing time for Bangladesh. And before that, we should not take any bigger loan,” he said.

The economist also suggested some specific steps for the authorities to strengthen the country’s economy, including finding out all tax payable citizens of the country and taking them to the tax net, stopping the alarming trend of money laundering, and combating the trade mis-invoicing.