DHAKA, 26 October 2004 — Bangladesh yesterday rejected outright an IMF plea for increasing oil prices to avert an extra burden on the economy that has already been devastated by recurrent floods.
“Raising oil prices will aggravate further the adverse impact on the economy,” Finance Minister M. Saifur Rahman told the visiting International Monetary Fund mission in Dhaka.
Led by IMF advisor for Asia and Pacific Nissanke Weerasinghe, the mission called on the minister after their two-week review of reform recipe under the funding agency’s Poverty Reduction and Growth Facility (PRGF).
It was the third review of Bangladesh’s three-year PRGF arrangement, conducted from Oct. 9. The mission is expected to propose completion of the review to the IMF’s Executive Board in January 2005.
“The fourth installment of the PRGF would be released soon,” Saifur Rahman told newsmen following the meeting, apparently indicating a successful outcome on the reform agenda.
The PRGF arrangement with a total lending commitment of $515 million, to be disbursed in seven installments, was approved in June 2003, and the IMF already has disbursed three installments.
“They (the mission) were positive about reforms, but requested to continue it with an accelerated pace,” the minister said.
Bangladesh Bank Governor Fakhruddin Ahmed, Finance Secretary Zakir Ahmed Khan, National Board of Revenue Chairman Khairuzzaman and IMF Resident Representative Jonathan C. Dunn were present at the meeting.
Later, mission chief Nissanke told a press conference that they were quite optimistic that the government would continue the ongoing reforms.
“No country has done it overnight... It’ll bring positive result for Bangladesh,” he said, stressing the need for continuation of the reform program.
He appreciated the reform progress in the revenue and banking systems, and at the same time stressed the need for making operational the large taxpayers unit (LTU) of VAT and strengthening the LTU for income tax.
