TBS argues Bangladesh's IMF programme must deliver bank repair, not money

The investment banker Fahim Chowdhury, writing in Dhaka's The Business Standard on 22 October, argues that the new IMF programme matters less for its money than for what it proves. Reported at about 4.5 billion dollars, the facility would show investors that the government is still able to reform. He recounts that the Finance Minister declared the conditions unacceptable on 4 October and said the programme had been cancelled. Twelve days later, in Bangkok, the same minister called the proposals acceptable in principle. Moody's moved the outlook to stable in September, while treating the IMF relationship as important support for external financing.

Chowdhury wants Dhaka to reach staff-level agreement with the IMF before it prices its first international sovereign bond, an issue of up to 1 billion dollars. Any extra cost conceded at issuance, he warns, is then paid over the whole life of the paper. He recalls that Pakistan returned to the Eurobond market in 2014, during its 2013 programme. The OGDCL share offer of November 2014 drew demand for only half the deal and was withdrawn. For Chowdhury that episode shows how an asset sale brought to market unprepared can destroy value.

The piece makes 3 recommendations. It wants staff-level agreement before the bond, a published assessment of bank capital needs ahead of IMF Board approval, and a single large privatisation chosen on commercial grounds. Chowdhury stresses that the capital shortfall of the banks and the bill the taxpayer will meet are not the same number, and that the public cost belongs openly in the budget. He also concedes that privatisation proceeds are one-off and cannot substitute for revenue reform.