It may be recalled that against the backdrop of multiple challenges (viz., balance-of-payment deficit, depletion of foreign exchange reserves, depreciation of the taka, and rising inflation) faced by the economy, the government went for the easy solution of a loan from the IMF. And a credit programme for $4.7 billion was agreed upon in January 2023. The loan, whose duration is 42 months, is to be disbursed in seven instalments—subject to satisfactory review by the agency. In June this year, the second review was successfully completed and the third tranche of $1.15 billion was released.
The loan, of course, came with conditionalities that include attaining a certain level of foreign exchange reserves (four months’ imports), raising tax revenues, periodic adjustments in the prices of petroleum products and electricity, scrapping of the fixed interest rate regime, moving to market-determined exchange rate, etc.
As part of the second review of the credit programme, the IMF came up with a risk assessment for the economy in which nine risk factors, local and international, have been identified. Such assessments are useful even under normal circumstances. And when the going gets tough, it is more so. The assessment, therefore, is welcome.