IMF’s conditions risk hindering our economic recovery
The International Monetary Fund (IMF) has set various conditions and targets under its ongoing $4.75 billion loan programme.
In 2023, the country’s foreign exchange reserves were so fragile that the fallen Awami League government had no choice but to comply with the IMF’s conditions.
Although the foreign exchange reserves have increased somewhat since the interim government took office in August last year, it cannot be said that the danger has been completely averted.
If the IMF conditions are not met, the loan will not be available. And if it is met, it will have adverse effects on various levels of the economy and business.
In this situation, Bangladesh has warned that it may withdraw from its $4.7 billion loan agreement with the IMF if the fund imposes additional conditions of future loan tranches.
According to a report of this daily published on Sunday, Special Assistant to Chief Adviser, Anisuzzaman Chowdhury, at an event on Saturday said Bangladesh might “walk away” from the agreement if the IMF insists on further reforms, potentially harming the economy.
Reportedly, tax exemptions and subsidies are being reduced one after another due to the IMF’s prescriptions to get a loan.The tax burden on consumers is increasing.
Despite complying with many conditions, this international lender is already delaying two installments of the loan. Earlier, the financial advisor has also warned against taking loans if necessary, upset by its activities.
Business leaders and experts believe that the IMF’s conditions do not work equally in all countries. They claim that while some of this organization’s conditions are helpful for the economy, some are counterproductive.
To them, while the conditions imposed on the financial sector have the potential to have some positive effects in the long term, the extent of the damage is not small.
Interest rates, currency exchange rates, reducing defaulted loans, bringing the dollar price closer to the market, all such conditions have a negative impact on the economy.
The IMF pressured 134 state-owned institutions to withdraw subsidies, considering them unprofitable. Although these institutions do not generate profits for the government, they do contribute to the economy and the quality of life of the people.
Bangladesh has shown resilience time and again. With the right balance of support and reform, it can regain its growth trajectory. But for that, pragmatism, not rigidity, must influence our decisions.