IMF conditionalities for credit availability

The International Monetary Fund imposed 16 conditionalities to disburse its most promised $1.0 billion credit to Bangladesh. Some of the conditions are as follows:

1. Demutualisation of Dhaka and Chittagong stock exchanges by December 2012;

2. Introduction of an automated taxpayer identification number; 

3. Adoption of an automatic adjustment mechanism for retail petroleum prices to ensure full pass-through of international prices;

4. By June 2012, a new VAT law has to be placed in parliament and an implementation plan and timetable for the new law has to be approved by the Finance Minister;

5. The Banking Companies Act (amendment) has to be placed in parliament by June 2012, which will aim at giving Bangladesh Bank (BB) sole legal supervisory and regulatory authority over all commercial banks, and setting proper criteria for major shareholders, board members and executive officers of the banks;

6. The government has to to design a set of new regulations on loan classification and loan-loss provisioning, in line with international best practices, by June 2014;

7. A new organisational structure of the National Board of Revenue (NBR) to support VAT implementation has to be approved by the finance minister by September;

8. Bangladesh Bank issues another order by September to adjust the new amended banking law, establishing a limit on a commercial bank's shareholdings in the stock market to 25.0% of its total regulatory capital.

These are collected from a report on the issue published in today's Daily Star. Here is the news link.

Comments:
1. Some of the conditionalities are definitely good, especially those related to bring the financial sector under the 'rule of law'. I pray that the authority of Bangladesh Bank to control the financial sector will improve throughout this process.
2. For those who want oppose IMF contionalities, I want to give a point to debate. I don't understand that why the government has been so much behind the IMF to receive such a small package of loan when we compare this with other sources of foreign capital. Since the late 2010, we have been listening that IMF will provide this $1 billion in three fiscal years. That means, the government will receive just more than $300.0 million per fiscal year (FY) and this news link also confirms that probably the process will start since this FY12. Do you know how much foreign capital we receive from other sources? Just look at the figures of FY11: (i) Export: more than $23.0 billion; (ii) Remittances: more than $11.5 billion; (iii) net FDI: $768 million; (iv) Foreign Aid: more than $1.0 billion.

 What type of benefits this extra $300.0 million from IMF will bring to the ongoing balance of payment crisis?