Global Meltdown : IMF to review fallout for 5 days

A mission of International Monetary Fund (IMF) will start reviewing from tomorrow the impact of the global financial meltdown on Bangladesh economy.

The mission during its five-day review is likely to offer financial assistance to Bangladesh under its new lending package, Bangladesh Bank sources said.

The three-member IMF mission led by the Adviser in the Asia and Pacific Department and IMF mission chief for Bangladesh Masato Miyazaki will continue discussion with the finance ministry, Bangladesh Bank, National Board of Revenue (NBR) and other ministries concerned till April 3.

Apart from financial crisis, the IMF team will also discuss revised and new budget and macro-economic situation. For this reason, IMF has placed around 50 questions to the government.

In February, an IMF mission also reviewed the situation and said that Bangladesh’s economy has so far been able to resist some of the effects of the global financial crisis. In its observation, the IMF team, however, said pressures from the global slowdown are building and growth could begin to moderate.

For the review to be started tomorrow, the IMF has sought to know whether the world economic recession had any impact on Bangladesh economy, in which sectors it was felt and to what extent. It has also wanted to know what preparations Bangladesh have to face the fallout.

The IMF mission also wanted to know what kind of impact may fall on remittance, from which country remittance inflow comes to Bangladesh and the manpower export situation.

Finance ministry sources said the fallout of world recession has already started being felt in some sectors. If the crisis prolongs, it may have a larger impact in the next fiscal year. The ministry has already started making preparation to face it, sources said.

In the budget of next fiscal year, the ministry will give necessary assistance where it is required. However, the sources said they would try to provide banking and tax facilities instead of cash incentives.

The source said the rationing being introduced for the garment workers is such type of a measure so that workers do not make demand for salary hike from the garment factory owners.

Last week the IMF announced creation of a new flexible credit line to overcome the global economic crisis. It would double non-concessional loan access limits, enhance its traditional stand-by facility, and simplify lending terms.

A Bangladesh Bank official said the IMF offered assistance support in February last to overcome the crisis. This time they are also likely to provide assistance under the new lending programme.

Finance ministry sources said they would not accept any tougher condition with the loan.

The official said the new government came to power following a landslide victory and it is bound to fulfil different election pledges. The first budget of the government will be made considering those things.

The government will have to give subsidy in different sectors, including social sectors. It would need foreign assistance for giving subsidy, said the finance ministry official.

Among the 50 questions, the IMF wanted to know about the subsidy and the government’s energy pricing policy in next year’s budget.

The IMF also wanted to know how much money would be required to implement the new pay scale by the government and what pressure it would have on the budget.

Finance ministry sources said the government plans to implement the pay scale in phases instead of doing it at a time. As a result, the pressure on the budget would be tolerable, sources said.

Source: The Daily Star, 29 March 2009


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