An eight-member Article-4 mission of International Monetary Fund (IMF) will arrive in Dhaka on September 4

Express (August 30, 2011)

An eight-member Article-4 mission of International Monetary Fund (IMF) will arrive in Dhaka on September 4 next on a two-week visit to have an in-depth look at the country's macro-economic fundamentals and the balance of payment (BoP) situation , a high official at the ministry of finance (MoF) has said.

The Extended Credit Facility (ECF) of IMF, under which the government sought $1.0 billion credit, will figure prominently at the discussion to be held between the policy makers and the Fund officials during their stay in the capital, sources said.

Ahead of the visit, the multilateral lending agency has made some queries about the real sectors, public enterprises, monetary and financial issues and the external sector.

After borrowing $490 million from IMF's poverty reduction growth facilities (PRGF) scheme in fiscal 2003-04, the country again sought around $1 billion under ECF arrangement for four years (fiscal 2011-14).

The government agencies concerned are now busy preparing the answers to the IMF's queries, while officials are updating themselves on various macro-economic issues that may come up during the visit of Article-4 mission, a ministry of finance official said.

Under Article-4 of the IMF Articles of agreement, the IMF holds bilateral discussions with member-countries, usually every year. A staff team visits the country, collects economic and financial information, and holds discussion on economic developments and policies with the officials of the country. On return to IMF headquarters, it prepares a report, which forms the basis for discussion by the executive board. At the conclusion of the discussion, the IMF Managing Director, as chairman of the board, summarises the views of the executive directors, and the summary is transmitted to the authorities of the country concerned.

Officials at the MoF said the overall macro-economic situation of the country is good, although the BoP situation has deteriorated. The bank borrowing of the government is increasing alarmingly. According to the latest data, the government borrowed Tk 30 billion during the first one and a half months of the current fiscal year.

"We need support from the IMF to address the BoP crisis," an MoF official said.

"We are hopeful of reaching a consensus with IMF during their upcoming visit on getting $1.0 billion ECF from them," he added.

However, IMF put forward a number of conditions to the government recently to become eligible for the proposed credit, sources said.

The conditions include enactment of new Value Added Tax (VAT) and income tax laws, establishing a monitoring framework for Bangladesh Petroleum Corporation, Bangladesh Chemical Industries Corporation, and Power Division, to set aside funds to cover losses, amendment to the Banking Company Act and phasing out ceiling on bank lending rates.

The IMF team will hold discussion with MoF, Bangladesh Bank, National Board of Revenue and Power Development Board, sources said.