In exchange, the government will have to continue trade liberalisation.

Earlier this month, the IMF board approved a Trade Integration Mechanism (TIM), which will allow the Fund to stand ready to provide resources, as necessary, to assist member countries in meeting balance of payments shortfalls that might result from multilateral trade liberalisation.

This loan will be issued against Bangladesh's quota with the IMF. As much as 10 percent of the quota can be drawn as loan. But in special cases, this can be higher.

"The IMF predicts that in the post-MFA regime, countries like Bangladesh may incur trade losses for the first few years," Finance Minister Saifur Rahman said yesterday on his return to Dhaka from a weeklong visit to the IMF and the World Bank head offices in Washington.

"There are fears that our export earning will drop," he added. "In this situation, the IMF has agreed to provide us a fund through a special window."

Speaking at Zia International Airport on his arrival early yesterday morning, Saifur said, "The IMF has asked us to modernise our ports and make them more efficient in the post-MFA regime. Otherwise, we will lose our market as we will fail to deliver goods to our clients."

Discussing the TIM in its board meeting on April 2, the directors of the Fund reiterated that a successful conclusion of the Doha Round will bring significant benefits to the world economy.

"The transition to a more liberal trade environment, however, also involves economic adjustments, which for several developing countries may raise added policy challenges," Acting Managing Director of the IMF Anne Krueger told the board, stressing the importance on continuation of trade liberalisation.

Some directors felt that the IMF's readiness to make its existing instruments available for supporting trade liberalisation should give sufficient confidence to members. Most directors saw considerable merit in a more tailored approach to address the balance of payments impact of trade adjustment resulting from the Doha Round.

The directors supported the establishment of the TIM to help members mitigate short-term balance of payments pressures stemming from trade liberalisation.

Under the TIM, the IMF should stand ready to discuss with qualifying countries facing such balance of payments shortfalls, new arrangements in the upper credit tranches, the Extended Fund Facility, or the Poverty Reduction and Growth Facility.