A visiting IMF mission led by its Adviser Thomas Rumbaugh conveyed the prescription to Finance Minister M Saifur Rahman at a wrap-up meeting on a $75 million fifth instalment of Poverty Reduction Growth Facility (PRGF) and a $25 million second tranche of Trade Integration Mechanism (TIM) loan.

After the meeting, Saifur told the press, "I told them we have but recently raised their prices. So, right now it's not possible to increase the prices of all these items at a time."

He said, "I informed the IMF team that the rice harvesting is now on. Winter vegetables are also coming to the market. If these result in a downward trend in the price level [of essentials], then we may consider adjusting the prices of these items."

The IMF mission arrived in Dhaka on November 13 to review the status of fulfilment of the conditions for the fifth PRGF tranche scheduled to be disbursed in December. Among the conditions, three major ones are appointing an adviser to Agrani Bank, restructuring the boards of nationalised commercial banks (NCBs) and introducing an audit cell at the National Board of Revenue.

Saifur said, as the government is short of its targets in fulfilling some of the conditions, a mission member told him, "You said you would cover four miles, but in reality you have trudged only two."

Meeting sources said, though the coalition government has increased the petroleum prices as many as eight times, the last being in September, the IMF mission was not satisfied with the current price level, which is much lower than that in other countries and the international market.

Due to the large gap between the international and the domestic fuel prices, Bangladesh Petroleum Corporation (BPC) that imports petroleum products has incurred a loss of around Tk 40 billion, said Saifur Rahman. The BPC also is burdened with a mammoth Tk 80 billion outstanding loan drawn from the NCBs.

The fuel price gap was the main cause for the depletion of foreign exchange reserve to $2.5 billion from its average level of $3 billion plus. It also boosted the public sector bank borrowing significantly in the current fiscal year, finance ministry sources said.

As the IMF mission pointed out these facts and asked Saifur to readjust fuel prices, the minister admitted that the price gap has become a major burden on the public exchequer, but he said, "We have to decide in this regard considering the socio-economic sustainability."

When a reporter mentioned that fuel prices have been on the decline in the international market for quite a while and asked Saifur whether he would reduce the domestic price if the international price goes down below $50, he said, "It's out of the question."

Because, he argued, the government has already lost $600 million in subsidising the petroleum prices. Besides, he said, there is not much probability of the international fuel prices to fall much lower that the current level.

On the IMF condition of appointing an adviser to Agrani Bank, an NCB, for availing of the PRGF, Saifur said they could not find any suitable person for the job.

Talking on this issue, Saifur digressed a little, saying the donors want to see oversight bodies like tax ombudsman and human rights commission. "But where do we find the right persons for these offices," he asked. For instance, he said, "I had to face a lot of hassles from my cabinet colleagues in setting up the Anti-Corruption Commission. We made the legislation, appointed commissioners, gave manpower, but if they don't work, I cannot be held liable for that."

Terming some of the IMF conditions contradictory, the minister said on the one hand, they want the letter of credit (LC) margin to go but, on the other hand, they ask the government to reduce imports. Again, he pointed out, they advocate for tight monetary policy and at the same time ask the government not to interfere in the central bank's affairs.

"I told them we have not seen much good coming out of applying your policies, but have achieved better results implementing our own," Saifur told the press at the post-meeting briefing.

On another condition, of privatising Rupali Bank, the finance minister said there is a stay order of the court on this move. But the case would be vacated soon and then the government will go forward with the privatisation, he told the IMF mission.