$1.0b IMF loan to Bangladesh tied with various time-bound reforms

[Skallagrim]

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The board of directors of IMF has recently approved $987 million loan under the ECF with zero interest rate. The loan is tied with financial and systematic time-bound reforms.

The objective of ECF scheme is to support the country's Balance of Payment (BoP) situation.

The reforms to be brought include:

-Containing subsidies in different areas

-Reforms in subsidy and banking system

-Adjusting fuel prices in line with their international market price

-Reforms in public financial management, bringing down inflation

-Increasing the prices of electricity at regular interval.



$1.0b IMF loan tied with various reforms: Muhith

Because of the importance implicated by the time-bound nature of this IMF loan I thought of making a separate thread instead of posting on the sticky Bangladesh Economy thread.

[anonymus]

The conditions put up by IMF would be beneficial for Bangladesh in long run.

It would induce some fiscal discipline in Bangladeshi Government and would also lead to tempering in inflation from supply point of view.Government giving out free doles to people result in inflation which has to be curbed by raising bank rates making credit dearer for people who add value to economy.Subsidies are used by people for immediate consumption generating no assets.

Only socialists would be against measures suggested by IMF.

[Skallagrim]

Subsidies are used by people for immediate consumption generating no assets.

No details are yet available. Anyway, the role of subsidy in economy is critical. Government subsidizes some sectors because of their importance in the national economy. Indirect subsidy in agriculture (e.g. subsidizing costs of fuels and fertilizers) saves a lot of foreign currency. Subsidy in the power sector lowers prices of some of the important export commodities. On the other hand, if the performance of a sector is hindered by corruption and mismanagement then subsidizing that sector is not justified.

[Skallagrim]

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One of the main reasons behind low government income and the consequent national budget deficit is import duty and tax exemptions. The beneficiaries are but a few who don't need them really. As most legislators are themselves businessmen, they exercise their power to enact rules and policies to exempt their own businesses from import duty and taxes.