REJAUL KARIM BYRON

The government will not need to commit to any prior actions to get the first instalment from the International Monetary Fund’s $4.5 billion loan in February, in a turn of events in its favour.

After the first instalment of $447.8 million, there will be six equal instalments of $659.18 million, with each instalment released upon satisfactory review by an IMF mission.

Prior actions, which are typically the conditions for loans that are not taken for any specific project, will be needed to unlock the successive instalments, The Daily Star has learnt from four people familiar with the discussions, who requested anonymity to disclose sensitive conversations.

The handful of conditions that the government and the IMF staff mission have agreed on will be made public once the loan gets approved by the IMF board in January.

“It is a soft programme -- nothing has been made difficult,” said one of the officials.

The IMF staff mission, which thrashed out the terms for the loan, did not come to Dhaka with a reform plan; it wanted to make sure that the government executes its own existing reform agenda.

“They imposed a timeline for the reforms on us. They are being reasonable with their demands. They understand the context of Bangladesh -- that reforms can’t be rushed,” he added.

Asked why the IMF is going lenient with Bangladesh when it has a reputation for being a domineering taskmaster, one of the officials said: “IMF is the global lender of last resort and Bangladesh is not in a crisis yet.”

There is a threat to macroeconomic stability and this programme is a pre-emptive step.

“Besides, Bangladesh is asking for support after a long time, so they want to help out as soon as possible. If they delay matters, it might cause harm to the economy,” he added.

When prodded on what the conditions agreed with the IMF staff mission are, they remained circumspect.

But Finance Minister AHM Mustafa Kamal and Bangladesh Bank Governor Abdur Rouf Talukder gave some clues on what the necessary reform actions would be.

Kamal said reforms include raising the tax-GDP ratio, implementing the VAT law and setting up an asset management company to dispose of soured loans.