Faiz Ahmed Chowdhury, Afsana Hossain, Mamun Chowdhury and edited by A. Z. M. Saleh
Unnayan Onneshan-The Innovators, March 2011
Bangladesh is negotiating a credit deal with the International Monetary Fund (IMF) equivalent to USD one billion under its Extended Credit Facilities (ECF) program for three years. The ECF would replace the Poverty Reduction and Growth Facility (PRGF) under which medium term financial support is provided to countries with persistent balance of payments problems. The replacement of ECF hardly changed any substantive policies, terms and maturity date as those were under the PRGF.
The IMF standby loans are provided to its members basically to maintain the balance of payments difficulties usually on the basis of strict adherence to stipulated corrective measures. The credit facility endorsed by the IMF is quite similar to that of the World Bank accompanied by a set of conditions which might go against the interest of the debtor countries. The archetypal prerequisites for IMF credit facility are privatization, trade liberalization, and increase of interest rate as well as reduction of subsidy in oil prices. These conditions are attached for the interests of the major IMF shareholders but might be counterproductive for the debtors’ economy in the long run. This issue of the Bangladesh Economic Update investigates the conditions of IMF’s one billion dollars loan and its implications in the economy of Bangladesh.