ECF loan draws economists' ire

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Offline fatema nusrat chowdhury

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ECF loan draws economists' ire
« on: February 25, 2015, 03:16:07 PM »
Country's leading economists Wednesday found the International Monetary Fund's (IMF) Extended Credit Facility (ECF), made available to Bangladesh recently, inadequate and untimely and felt that reform-strings attached to it would be difficult to implement by the government.

They also criticised the multilateral lending agency for ignoring many core issues, including governance, allowing of new banks and provision for whitening black money.

But the IMF mission chief and the Bangladesh Bank consultant defended the ECF saying that it would give a positive signal about the country to other development partners, investors' lending agencies and rating agencies. Apart from that the four-point reform measures will also have significant interventions to various core governance issues, they said.

They were speaking at a roundtable discussion on 'The New ECF Programme and Bangladesh Current Macroeconomic Situation and Outlook," organised by the Policy Research Institute (PRI) at its conference room.

Former finance minister M Syeduzzaman said that US$1.0 billion assistance is very negligible to enforce reform activities compared to the country's annual export earning of $ 22 billion and remittance earning of over $12 billion.

Syeduzzaman said that the four-point reform agenda brought under the EFC is nothing new.

Former adviser to the caretaker government Mirza AB Azizul Islam said the major challenge facing the reform agenda will be its implementation.

"IMF may have undertaken many legal and regulatory changes for bringing reform in tax measures but implementation of those at the field level will be an uphill task," he said.

About reform in subsidy adjustment Mirza Aziz said introduction of automatic price regime for imported fuel in line with international market rate is an overambitious scheme. "Considering the political situation now prevailing in the country it would be a quite challenging task to introduce an automatic price adjustment mechanism in case of fuel oils," he commented.

About implementation of VAT law policy he said introducing a law is very easy but implementation of that is always difficult.

He blamed donor agencies for their poor pace and small amount of funding to the country saying, "External financing kept at a low level has forced the government to borrow from banking sector thus squeezing the credit facility for private sector," he said.

Dr. Mustafa K Mujeri, Director General, BIDS said the timing of the funding is very wrong when the government has only two years left to complete its tenure and when the government has to undertake different politically populist programmes.

He said with the small amount of fund along with seven equal installments will have a minor impact on the reform activities. He expressed the fear that many of the reform activities would unfinished due to the bad timing and size of funding.

He also criticised the automatic fuel price adjustment move saying that without proper consultation with stakeholders and communication campaign, hasty implementation of any reform would face serious challenge.