International Monetary Fund yesterday said it may release the second instalment -- $141 million -- of its $1 billion loans by January.

But before that, the board and management of the lender will have to agree with the understandings between the government and an IMF team on the conditions tagged with the loan promise.

The IMF mission wrapped up its 10-day visit to Dhaka yesterday.

The chief of the team, David Cowen, in a statement said: “Performance so far has been generally sound. Quantitative targets are broadly on track, with all performance criteria met at end-June 2012.”

After a meeting at the Finance Division, Cowen at a press conference said, “Progress has also been made on structural measures, notwithstanding additional time needed to build policy consensus and several key reforms.”

He also said the government will pursue legal and prudential reforms to strengthening financial sector governance and oversight, and reinforce Bangladesh Bank's supervisory mandate and capacity.

Cowen said amendments to the Banking Companies Act aim to put oversight of all banks on a level-playing field.

The amendments will also strengthen internal governance and risk controls, in support of a stable, well-regulated banking system.

The IMF mission chief said enhanced oversight of the state-owned commercial banks will also be pursued to improve their financial performance and increase their operational independence.

On pursuing sound fiscal and debt management, the government has agreed to contain its budget deficit to 4.5 percent of gross domestic product in fiscal 2013, including the settlement of fertiliser subsidy overrun from fiscal 2012.

The IMF official said, further efforts will be made to contain subsidy costs, anchored by a fuel price adjustment formula.

To mitigate the impact of adjustments on the most vulnerable, agreed fiscal target will protect social spending by the government, Cowen added.

About the growth prospects, he said, “We expect the real GDP to grow by about 6 percent in FY13, reflecting external uncertainties and the broader global slowdown."

News: The Daily Star/Bangladesh/7th-Dec-12