Muhith opposes IMF proposal to monitor soft loans

March 31, 2014

Finance minister AMA Muhith has opposed an International Monetary Fund proposal saying monitoring concessional debts was not in the jurisdiction of the multilateral lending agency.
He made the observation after a meeting with visiting IMF South Asian executive director Rakesh Mohan at the secretariat on Sunday.Early this year, the IMF in a proposal wanted to monitor the amount, quality and interest rate of soft loans the country borrows from the World Bank, Japan International Corporation Agency and Asian Development Bank.
It suggested that the country should not take concessional loans that do not have 35 per cent grant element.
‘We opposed the proposal seriously’, Muhith told reporters. ‘This is not in the jurisdiction of the IMF’, he said.
The IMF wanted to tag the new policy called ‘Debt Limits in Fund Programmes with Low Income Countries’ with the ongoing credit programme called Extended Credit Facility.
IMF has already released the fourth tranche of the ECF. The next and fifth installment worth US$ 140 million is due in next June.
The country signed the ECF with the IMF in 2012 to receive around one billion dollar in seven installments until April 2015.
Muhith said the World Bank now monitors the concessional loans. He said there would be no serious damage if the IMF looks after the concessional loans.
‘But I don’t want the IMF to do so,’ he said, adding that there was division of labour between the IMF and the WB.
He said the WB should continue to oversee the concessional loans.
Muhith said Bangladesh’s performance in debt servicing was good. He noted that maintaining a good record in debt servicing has become a culture of the country.
Rakesh Mohan praised the present macro-economic condition saying reserve and balance of payment in Bangladesh were in good position.

-With New Age input

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