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IMF loan: a bitter pill

Akbar Ali Khan says the fund is tied with conditions

Star Business Report
The International Monetary Fund's loan is a bitter pill, which not every patient can swallow, Akbar Ali Khan, a former caretaker government adviser, said yesterday.
His comments came at a training workshop for economic reporters at Ruposhi Bangla Hotel organised jointly by Economic Reporters' Forum (ERF) and Bangladesh Investment Climate Fund of International Finance Corporation.
Khan, who was a finance adviser, also criticised the government for telling the IMF that the country's economy is under pressure and it needs fund to support the balance of payments.
“When we (economists) said the macro-economy is under pressure, they (government high-ups) said it (our comment) was rubbish. But IMF document shows the economy is under pressure and it will take at least three years to recover,” he said.
Recently, the government has received the first instalment of the IMF's $987 million loan. The former adviser said the IMF's influence on the economy would rise due to this loan.
Khan said the loan is tied with financial and systematic time-bound conditions, including withdrawal of subsidies and supplementary duty on luxury imports, adjusting fuel prices in line with the international market rate and increasing power prices at regular interval.
“All of these reforms are not required at the moment,” said Khan, also a former finance and cabinet secretary.
“The IMF gives a heavy dose where a small one works.” In most cases, he
said, the IMF takes a rigid stance and it would have been much better if the government could run the country without the IMF loan,” he said.
The former adviser, however, said he is happy that the loan would keep the government in control of economic management.
Former central bank governor Dr Mohammed Farashuddin, former member of the National Board of Revenue Aminur Rahman, Dhaka University professor MA Taslim and Dr Khandker Golam Moazzem of Centre for Policy Dialogue were the other speakers.
Farashuddin said, though the IMF's conditions seem quite stringent, those need to be abided by for the sake of the economy.
“Why we'll sell electricity at half the rate of India's," he said, adding that the IMF tells Bangladesh to adjust this type of discriminations.
The former governor said he is too concerned to see a huge capital flight through under and over invoicing of exports and imports.
Taslim said the rising payment for interest is becoming a 'big burden' for the economy. He also said feeding the rental power plants has hurt the private sector investments.
Former NBR member Rahman said the government may fail to achieve the revenue target this fiscal year due to not starting the constructions of the Padma bridge and Dhaka-Chittagong fourlanehighway.
Khawza Main Uddin, ERF president, and Abdur Rahim Harmachi, general secretary, were also present.