IMF to discuss Bangladesh's 2nd loan tranche today

A board meeting of the International Monetary Fund (IMF) is scheduled to be held today, where about $681 million in a second loan tranche is expected to be approved for Bangladesh even though two preconditions have not been met.

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.

In October, an IMF delegation came to Bangladesh on a two-week visit, reviewed the loan programme and placed the second loan tranche proposal before the IMF board.

Officials of the finance ministry and Bangladesh Bank said they were hopeful of an approval as they have explained to the IMF why Bangladesh failed to meet the two preconditions.

Six quantitative targets were set by the IMF for the first half of 2023.

One of the unmet preconditions was for maintaining a minimum net international reserve (NIR) of $24.46 billion by 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, which fell Tk 17,946 crore short of the goal, according to a Finance Division report.

In today's meeting, a Sri Lankan loan proposal will also be placed, detailing the first review of an extended arrangement and request for waiver of non-observance of performance criterion and for modification of performance criteria.

The meeting will also review financing assurances and rephasing of access, according to the IMF.