IMF loan not critical for Bangladesh, says central bank governor

Bangladesh Bank Governor Ahsan H Mansur has said that while discussions with the International Monetary Fund (IMF) are ongoing, securing a loan is not crucial for the country's economy.

"They or we have not yet reached a consensus, but it is not like we are very far apart. If we do not reach a consensus, it will not be a big problem either. The Bangladeshi economy will continue as it is," he said during an interview following a meeting with the IMF on Friday noon (Washington time).

During an interview with Golam Mortuza, Press Minister at the Bangladesh Mission in Washington, US, which he posted on his Facebook profile at 8:22am this morning (April 26), Mansur stressed that Bangladesh's focus is on ensuring its own financial stability and implementing necessary reforms independently.

"We have to do the restructuring and reform of our banking sector ourselves. We have to reform our exchange market ourselves. The IMF plays a supporting role. If we think this [loan] will not be supportive, then we will not take it," he said.

Responding to a question about the necessity of IMF support, Mansur said, "Actually, the balance of payment support that the IMF gives, we will not have any problem even if we do not get it. It's a sweetener; there is enough sweetness already, just a little more boost. There is no crisis here, our reserves are good."

He noted that foreign reserves are stable, remittance inflow remains strong at 28.6% growth as of Thursday, and export earnings are expected to achieve double-digit growth this year. As a result, the country's current account deficit has effectively come down to zero, he added.

"Our discussions with the IMF have two parts—money is secondary. Primarily, our work is reforms: financial reforms, tax system reforms. In these areas, the IMF is playing a significant role, and will continue to do so in the future," Mansur said.

He explained that differences remain mainly on issues relating to the exchange rate and revenue.

"The revenue issue has been more or less agreed upon. In the exchange issue, we think we do not have any problems. The market is stable, we are not selling [dollars]," he added.

Mansur stated firmly that Bangladesh was under no obligation to accept conditions that were not in its interest.

"We have not become Sri Lanka, we have not become Pakistan either. We are not in a situation where we have to take it. Maybe six months ago, there was a situation where we had to take it, but not anymore," he said.

Highlighting the broader priorities, he said the real objective was not obtaining funds but securing reforms, particularly ensuring the autonomy of the central bank to protect the financial sector from political pressure.

Referring to money laundering during the previous government's tenure, he said, "This is much more important than money. Our money is gone, about $24-$25 billion gone. If we get financial assistance, how many billions will we get? Nothing."

Mansur stressed that discussions with the IMF were more of a policy dialogue rather than strict negotiations and expressed hope that a decision could be reached soon.

Regarding other donor agencies, he said project loans generally do not have cross-conditions, but non-project loans, such as budget support, require additional approvals.

"I believe we should not take budget support anymore because ultimately we have to pay it. Budget support is not an investment."

He pointed out that project loans generate financial or social returns, while budget support merely sustains government expenditure without creating future value. "We have to grow out of that," he said.

Ahsan H Mansur yesterday (24 April) said Bangladesh getting the fourth and fifth instalments of the loan from the International Monetary Fund (IMF) now depends on the condition of letting the market decide the US dollar rate.

The government hoped Bangladesh would get the loans, although a discussion on the conditions is yet to take place, reports Prothom Alo.

Bangladesh is getting $4.7 billion from the IMF, of which $2.31 billion has already been disbursed, and $2.39 billion is still pending.