The government has decided not to receive the remaining two tranches of $280m under IMF’s Extended Credit Facility programme as it thinks the lender’s condition is tough and against state norms.
Against the ECF, the lender tagged a condition that the government would conduct an audit on financial transaction of Bangladesh Petroleum Corporation by an international audit firm and make an international standard balance sheet for the BPC.
“We have decided not to take two tranches of ECF loan as Bangladesh would not accept a harsh condition of appointing an international auditor for the BPC,” Finance Minister AMA Muhith told Dhaka Tribune yesterday.
“It would not go with norm of the state to hire an international auditor. Besides, I think our audit firm is capable enough to conduct the audit,” he added.
Muhith said the government, however, had already fulfilled the ECF pledge to reform value added tax law.
But when asked about Bangladesh Bank’s audit by an international firm, finance minister said: “It’s a different matter in case of the central bank.”
A Finance Division official, however, lent support to the IMF’s condition.
“BPC’s yearly transaction is Tk50,000 crore. So, it will be good for the organisation to make an international standard balance sheet and run audit by an international firm,” he said asking not to be named.
He said: “It is frustrating that the country’s lone fuel oil importer BPC has never prepared a standard balance sheet in last 45 years. Allegations are also there that public funds have been misappropriated when BPC bought fuel oil from abroad.”
As international oil prices decline to a five-year low, the BPC has managed to earn a profit for the first time in 14 years. The corporation is also expected to earn a healthy profit in last fiscal year.
Finance Division sources said the decision regarding release of the two instalments are likely to be placed before the IMF board on July 22.
IMF executive director Rakesh Mohan recently sent a letter to AMA Muhith requesting updates on execution of the two reform pledges and progress made to meet the conditions.
Rakesh Mohan also requested information on passage of the VAT law in parliament and audit of the BPC.
Finance minister replied that he had asked the authorities concerned to report him about the latest development on VAT law which was passed in the parliament recently.
Finance adviser to last caretaker government Dr AB Mirza Azizul Islam found no reason behind rejecting the ECF tranches on the excuse of conditions.
“The decision not to take last two ECF tranches is not logical. Rather, an audit to BPC by an international firm will be goof for the country’s lone oil importer,” he said.
The IMF delayed the sixth of the seven-part tranches for the $1bn loan in November last year after the government failed to meet two of its relevant conditions -- related to the VAT law and audit of BPC.
On April 12, 2012, the IMF board decided three-year arrangement loan to Bangladesh under its ECF programme to help the country overcome its macroeconomic pressures. The ECF carries zero per cent rate of interest and the loan is to be repaid within 10 years.
