International Monetary Fund (IMF) will not give any money to Bangladesh if the country continues to take suppliers' credit to implement different projects.

Finance Minister M Saifur Rahman yesterday quoted the IMF as saying, "If you [Bangladesh] take suppliers' credit, we are not going to give you money."

Saifur told journalists about the Bretton Woods institution's discontent over different ministries' growing reliance on suppliers' credit after a meeting with an IMF mission

yesterday.

A finance ministry source said though the interest rates are higher in suppliers' credit, the tendency of the government organs to take the credit is increasing day by day.

In case of a soft loan, the interest rate is less than 1 percent and the loan is payable within up to 50 years whereas in suppliers' credit, the interest rate ranges from 3.5 to 12 percent and the money has to be repaid within up to 12 years. Besides, the goods supplied against the credit are all too often overvalued. For instance, if the original cost of a good is Tk 100, it is priced at Tk

500 in suppliers' credit, the source said.

According to economic relations division (ERD) statistics, from FY 02 to FY 04 Bangladesh took suppliers' credit worth of $534.88 million while in five years from FY 97 to FY 01 it totalled $ 212.15 million.

The source explained that since the soft loans are invariably tagged with many conditions, different ministries are more inclined to take suppliers' credit. The present government after coming to power had made strict guidelines to arrest the trend of taking suppliers' credit. But ample opportunity for various quarters to make unjust financial gains in this form of credit has always tempted them to carry on the trend.

The six-member IMF mission led by Tomas R Rumbaugh, IMF advisor for the Asia Pacific, arrived in Bangladesh on September 3 to review the overall economic state of the country. They are expected to stay here until September 11.

Earlier the IMF missions would come once a year, but since Bangladesh took Poverty Reduction Growth Facilities (PRGF) Loan in 2003, the United Nations financial agency has been sending missions to the country in every three months.

Tomas Rumbaugh on meeting the finance minister said it was not a formal review meeting of the PRGF, it was just a stocktaking exercise. He however said another IMF mission which is due towards the end of this year will review the PRGF situation.

About the economic reforms of the country, Rumbaugh observed that Bangladesh has made some progress, but it certainly needs to press ahead with the reform programme and improve further.

While briefing the reporters on the meeting, Saifur said he has told the mission that the government has already brought about a lot of reforms. But the World Bank (WB) and the IMF sometimes ask it [government] to go for tax increases and then again suggest reducing the taxes. These are contradictory conditions they impose.

"I have told them reforms will go on if you give money and if you don't there won't be any," he observed.

Saifur said Bangladesh's relations with the IMF are fine while those with the World Bank are going through a rough patch.

He said the government has reduced taxes [on some 3,000 items] and raised oil prices at the wishes of the WB. "If they still don't feel like giving us money, we are not going to take money from them, we will manage it on our own," he said.

Besides, the finance minister said, "We are the ones to take decisions on our economy as well as the reform programme, we are supposed to be in the driving seat. Lately, it seems like we have been pushed to the back seats while they [WB and IMF] have got into the driving seat. But it simply cannot be like this."