IMF team to visit Bangladesh this week to discuss USD 4.5b loan request

[Indos]

It will be given as line of credit which Bangladesh will use as needed. I read somewhere Bangladesh may use it on certain projects. IMF has set 33 reform conditions for granting the line of credit.


China gives loan at a rate of 2-3% that many says expensive from that perspective I said it’s expensive.

China loan is related to project where their company will do it and using their own sourced material. So in essence, they are pouring the money to buy their own company service and products.

While IMF loan is more into securing the financial strength of the country and usually related to meet the USD need related to import or market intervention to create stability in currency market

 

[SoulSpokesman]

@Ajamal

Jamal sb,

Add 19% Depreciation of Taka Vs USD in last 1 year. 19%+2%=21% return BD will have to pay on loan assuming taka continues to fall at same rate.

That is a very unreasonable assumption. The last 12 months have been an aberration; and there is no reason to believe that BDT will depreciate at the same rate. If you look at the long run depreciation rate it is about 3-4% which is about the same as INR.

Regards

 

[bluesky]

@Ajamal

Jamal sb,

Add 19% Depreciation of Taka Vs USD in last 1 year. 19%+2%=21% return BD will have to pay on loan assuming taka continues to fall at same rate.

That is a very unreasonable assumption. The last 12 months have been an aberration; and there is no reason to believe that BDT will depreciate at the same rate. If you look at the long run depreciation rate it is about 3-4% which is about the same as INR.

Regards

Who knows BDT may fall below 150 to a dollar during the next six months. I predicted about six/ eight months before that BDT will fall to 120 which it has fallen to now.

Do not please overly optimistic without knowing the reality. BD foreign currency reserves are not actually $37 billion as our Govt wants people like you to believe.

From this figure, deduct $7 to $8 billion which was virtually gifted to BAL big people in the name of EDF (Export Development Fund). This money is not being and will not be returned by the stakeholders because they combinedly supported Hasina Bibi in power.

It is a kind of Give and Takes, and $7 billion was stolen. Now, the govt/ BB is negotiating with these big people to pay back the money in BDT gradually.

What a nice arrangement!!

 

[SoulSpokesman]

@bluesky

I predicted about six/ eight months before that BDT will fall to 120 which it has fallen to now.

Please dont spread disinformaton, Dada. BDT is 105 to the USD, not 120. And all currencies have fallen against the USD barring the PKR which has appreciated after Dollar Dar became FM.

deduct $7 to $8 billion which was virtually gifted to BAL big people in the name of EDF (Export Development Fund).

Even if I assume it is true, BD reserves will still be USD 30 billion. Yeah it has fallen but then all EM reserves are down by almost a USD 1 trillion- India alone has contributed over 100 billion to the decline.

Regards

 

[bluesky]

Please dont spread disinformaton, Dada. BDT is 105 to the USD, not 120. And all currencies have fallen against the USD barring the PKR which has appreciated after Dollar Dar became FM.

It is almost 120 taka to a dollar. Am I wrong? It is because of the news of the IMF bailout. So, wait for a few more months when the IMF money is eaten up by the BAL cronies.

Even another billion-dollar WB loan will not suffice. BD economy is based on nothing but low-value garments. No machines, no metal-based technology, and no construction know-how, and all the projects have been funded and constructed by foreigners.

And you predict BD will become another Japan!! And, this is without contribution by the country's own people and money? Are you serious? Now, tell me which country ever developed BD style?

 

[SoulSpokesman]

@bluesky

And you predict BD will become another Japan!!

For God's sake, Dada, cease and desist! Who has said that BD will become another Japan? Not even UKB Dada for sure.

Regards

 

[Destranator]

What is this? BD has $36 Billion reserves and needs IMF? I don't understand. Pakistan's finance minister says they have no problem and they have less than $8 billion.

Pakistan's Forex Reserves Fallen to their Lowest Level in 3 Years​

Pakistan's Forex Reserves Fallen to their Lowest Level in 3 Years

By IndraStra Global News Team

www.indrastra.com

$36 billion is nothing when you take you into account the below:
1. Imports last FY was around $80 bn
2. 80% of goods exports are concentrated in one sector which faces stiff global competition - garments.

Even reserves equalling a year's worth of import bills is not "safe" for an economy like BD's.

The govt is doing the right thing by arranging cheap finance before shit hits the fan.

IMF team to visit Bangladesh this week to discuss USD 4.5b loan request​

IMF is impressed by the manner in which BD enforced debt trap on Sri Lanka. They are visiting to take lessons.

 

[bluesky]

What is this? BD has $36 Billion reserves and needs IMF? I don't understand. Pakistan's finance minister says they have no problem and they have less than $8 billion.

BD reserves are less than $29 billion when $7 billion or so of EDF (Economic Development Fund) money is not counted in it. The govt has allocated and disbursed this $7 billion to BD private cronies but is also counting it at the same time in the foreign currency reserves. This money is not in the reserves.

Some people doubt even this $29 billion figure. The actual figure must be low and hence the IMF bailout money.

@bluesky

And you predict BD will become another Japan!!

For God's sake, Dada, cease and desist! Who has said that BD will become another Japan? Not even UKB Dada for sure.

Regards

Stupid Indians like you talk incessantly about a great Bangladesh which will not happen in the next 1000 years. Please remove the colored glasses from your eyes to see the reality. It is a non-industrialized and non-developed country.

 

[mb444]

1.5 billion usd will be interest free and the rest at a rate of 2% which is not cheap. Just for your information.

Bangladesh is taking the loan for three projects though forgot the details of the projects. Out of 4.5 billion usd 1.5 billion usd May be released this year.

2% is certainly high, I was not aware of the terms.

Need to control capital flight, absolutely come down hard on luxury imports, aggressively crack down on hundi. Lots of remitences are coming in but not in USD and not via official channels...BD needs to offer higher than hundi rates.... it will still cost us less in the long run.

BD should also issue an USD bond that any one can buy with very high interest paid in taka.

Issue money whitening scheme that allows people to bring in USD from overseas and hold USD in BD banks without any restrictions of taking them out.

Allow money whitening scheme where black money to be converted into USD at the lower govt rate and which needs to be held in account of 3 years.


BD can ride this out but it needs to stop bleeding USD. This is not a BD specific issue many countries are facing this. BD needs to be innovative in tacking this.

 

[SoulSpokesman]

@bluesky

Stupid Indians like you talk incessantly about a great Bangladesh

It is really quite regrettable that an intelligent and thinking, albeit opinionated, poster should resort to ad hominems like this. Certainly no Indian, not even sympathetic ones like Joe Dada (@Joe Shearer) and me have said anything about BD being a great nation. There is much however for the poorer and less developed states of India and Pakistan to learn from BD as to how to take care of its citizenry, even within limited means, and how to keep bigotry and lafangebaazi at bay.

Regards

 

[nahtanbob]

It will be given as line of credit which Bangladesh will use as needed. I read somewhere Bangladesh may use it on certain projects. IMF has set 33 reform conditions for granting the line of credit.


China gives loan at a rate of 2-3% that many says expensive from that perspective I said it’s expensive.

that is not the average interest rate of Chinese loans

I think @Black_cats is comparing with the interest rates of Chinese loans. In many cases, the rates are between 3% to 6%. So, the IMF loan at 2% seems to be cheap, but, in reality, it is not.

For example, the interest volume of $4,500 million immediately after the grace period is $4500 x 2% = $90 million. Now, if the period of payment is assumed to be 20 years, the volume of interest only is $900 million.

$4500 divided by 20 years (assumed) is $225 million. So, the GoB will be paying back ($225 million + $45 million) = $270 million of money every year.

And the total repayment volume is ($270 x 20 years) = $5400 million. $900 million is the interest. $900 million in interest money is not that small.

Many countries in Latin America lost their economic strength due to the loan burden.

Latin America is a story of economic populism and social inequities gone out of whack

 

[mb444]

UK bonds are currently above 4%, US 2 and 5 year bonds the same but lower for 10 years and above. Eurozone less than 3% and japan with its economy tanking is less than 0.5%. BD 10 year bonds is above 8% but those are in Taka.

With regards to BD not all of our reserves in USD. BD maintains reserves in Euro, GBP and Yen. There is no issue with reserve balance with the last 3.

People needs to realise that BD is seeking facility to ride out USD crunch. BD can convert the other reserves to USD if required but given that those are also falling against USD it is economical to borrow dollar at zero or low rates.

Its a short term crunch, BB is taking action but needs to go further. No need to think the situation is not serious but at the same time we have enough gas in tank to face this situation. BDs debt to GDP is small, economy is growing and man power export is experiencing an upswing.

Careful management is the key and I am cautiously optimistic of BB to steer us through this period. Fed can not keep this up, US is also suffering and their exports are taking a hit. Fed is doing all this to dampen inflation to smooth out the global recession but imho can not be avoided.

 

[Joe Shearer]

@bluesky

Stupid Indians like you talk incessantly about a great Bangladesh

It is really quite regrettable that an intelligent and thinking, albeit opinionated, poster should resort to ad hominems like this. Certainly no Indian, not even sympathetic ones like Joe Dada (@Joe Shearer) and me have said anything about BD being a great nation. There is much however for the poorer and less developed states of India and Pakistan to learn from BD as to how to take care of its citizenry, even within limited means, and how to keep bigotry and lafangebaazi at bay.

Regards

Ad hominem of this sort is just plain deplorable. Difficult to justify no matter what the provocation.

 

[PadmaBridge]

UK bonds are currently above 4%, US 2 and 5 year bonds the same but lower for 10 years and above. Eurozone less than 3% and japan with its economy tanking is less than 0.5%. BD 10 year bonds is above 8% but those are in Taka.

With regards to BD not all of our reserves in USD. BD maintains reserves in Euro, GBP and Yen. There is no issue with reserve balance with the last 3.

People needs to realise that BD is seeking facility to ride out USD crunch. BD can convert the other reserves to USD if required but given that those are also falling against USD it is economical to borrow dollar at zero or low rates.

Its a short term crunch, BB is taking action but needs to go further. No need to think the situation is not serious but at the same time we have enough gas in tank to face this situation. BDs debt to GDP is small, economy is growing and man power export is experiencing an upswing.

Careful management is the key and I am cautiously optimistic of BB to steer us through this period. Fed can not keep this up, US is also suffering and their exports are taking a hit. Fed is doing all this to dampen inflation to smooth out the global recession but imho can not be avoided.

You guys really need to understand the basics.

Economics is a hard subject.

You are spouting bond rates of different countries - whilst ignoring the currency and inflation.

Let’s take your stupid comparison of yen based bond rate and taka based bond rate

Japan’s inflation is running at 3%. Whilst BD inflation is at 10%.

Neither is giving a real term return! Bond holder is losing roughly the same on both.

Now let’s look at the IMF interest rate at 2%. US inflation is at 5.5%. Again, IMF is lending way below inflation.

@UKBengali you are the only one who understands economics in this miserable forum.

Ad hominem of this sort is just plain deplorable. Difficult to justify no matter what the provocation.

This dude has no understanding of economics.

Watches a few YouTube videos by cranks - and thinks he is Paul Krugman

 

[Ajamal]

@Ajamal

Jamal sb,

Add 19% Depreciation of Taka Vs USD in last 1 year. 19%+2%=21% return BD will have to pay on loan assuming taka continues to fall at same rate.

That is a very unreasonable assumption. The last 12 months have been an aberration; and there is no reason to believe that BDT will depreciate at the same rate. If you look at the long run depreciation rate it is about 3-4% which is about the same as INR.

Regards

But you are seeking loan . This will worsen the condition. As you seek the loan, pressure on Taka will always increase and will lead to rapid depreaciation.