Bangladesh seeking IMF loan is a pragmatic call: Former foreign secretary

After Sri Lanka and Pakistan, another neighbour of India, Bangladesh, has approached the IMF for a package of USD4.5 billion. In an exclusive interaction with The Economic Times Online, former foreign secretary of Bangladesh Shahidul Haque has expressed confidence in his country’s economy and fundamentals, saying that its government reaching out to IMF is a pragmatic move.

“Bangladesh has pre-emptively gone to IMF. The fundamentals are sound. Its economy, agriculture, and services are doing extremely well, with close to 7% growth,” Haque said.

Bangladesh is merely being cautious and approaching the IMF as a precautionary step, he added. “It has not gone to the IMF in a desperate situation like Sri Lanka did…. Sri Lanka should have gone [to the IMF] a year ago, but it did not, and that’s why the crisis.”


Haque said Bangladesh has approached the IMF, as it wanted to ensure that there is no instability in the future. “We have a USD40 billion foreign [exchange] reserve, which takes care of five to seven months of input. It is very healthy — much higher than the IMF requirements,” he added. “It [the IMF step] is not a desperate call, it is a pragmatic call.”

Top diplomatic sources in the Indian government told ET Online that India is not worried about Bangladesh seeking an IMF loan. According to them, Bangladesh is in a better position economically than Sri Lanka.

Haque pointed out that India is an important partner in Bangladesh’s foreign policy. The two countries are set to hold discussions around a comprehensive economic partnership during Bangladesh Prime Minister Sheikh Hasina’s visit to India on September 5.

Talking about China’s Belt and Road Initiative (BRI) and the worry of a debt trap, Haque pointed out that Bangladesh has been selective about the approval of BRI projects. “We are [worried about the debt trap], but we have our own policies. We take that into consideration,” he said.

“There are projects which do not give return and create a danger. So, we have been very selective [about accepting the projects of the Chinese BRI]. We are aware of it, and we’ll continue to be aware.”