Dhaka seeks IMF loans as forex reserves wobble

NEW DELHI, JULY 2

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After Pakistan and Sri Lanka, another Indian neighbor, Bangladesh, is in talks with the International Monetary Fund (IMF) to shore up its foreign currency reserves that are under pressure due to high commodity prices and economic slowdown in its mainstay export markets of EU and the US.

Dhaka is also looking for a $1-billion loan from the World Bank for the same purpose.

The Bangladesh Finance Ministry, in talks for a $4.5 billion IMF buffer for its forex reserves, will field a delegation from Washington on July 12 for talks on reciprocal conditions that it will have to accept.

Some of the changes it will have to make are reforms in public sector banks, reducing NPAs, developing capital markets and improving monetary and fiscal governance.

Pakistan is in trouble for not implementing some of the conditions it had agreed to while accepting an earlier IMF loan. This time, despite Pakistan’s forex reserves dwindling to less than $10 billion, the IMF has given no timeline about when it will release the first tranche of $ 900 million under its $ 6 billion programme spread over three years. In its desperation to secure the loan, Pakistan on Friday suo moto announced politically unpopular changes such as higher taxes for the rich and cut in subsidy on fuel.