Bangladesh backs out of “Counter Trade”
with Southeast Asian countries including Burma
Dhaka, 28 February: Bangladesh
had to cancel the import of Malaysian palm oil worth 20 million US dollars
through a “counter trade” plan, reports the Janakantha, a Bengali language
daily in Dhaka yesterday.
The intervention by the International Monetary Fund (IMF) has finally compelled
the government of Bangladesh
to back away from a “Counter Trade” plan with Malaysia,
A reliable source in the government has said that, the message on the inability
to conduct such deals has been relayed to the relevant authority of Malaysia.
Though the Bangladesh
side took the initiative to solicit Malaysia
for advice on this point, it had to back out of the proposal in the face of
some of the stipulations laid down by IMF.
The explanation given by Bangladesh
side in this regard is that, since it has been conducting rounds of discussions
with IMF on debt issue, it is not possible for the country to carry on imports
by Counter Trade at this moment. The guarantee of the central bank is a
prerequisite among other stipulations in a counter trade process. In this
issue IMF categorically said that, no public guarantee on part of the central
bank in such negotiations can be allowed if Bangladesh
goes for future loans from the institution.
It may be mentioned that those countries that are facing foreign currency
crisis usually conduct foreign trade through this process in which the two
countries involved mutually conduct export and import for a certain period
(extending usually to three or six months) without making any currency
payments, after which they reciprocally check their volumes of trade and do the
coordination and work out the accounts for payment of dues.
Sources in the government say that Bangladesh
has meanwhile conducted talks on counter trade issues with Malaysia,
and Burma and
received positive response from them all. Bangladesh
initiated the rounds of talks with a view to increase its volume of export in
the face of decreasing export to the markets in USA
and Europe since last year. But the door to export
opportunity will not be open unless guarantee from the central bank is
Meanwhile, the Finance Minister M Saifur Rahman made requests to the IMF for
emergency loan assistance last October to deal with the acute bank reserve
crisis. Since then there have been a number of rounds of talks with IMF
on this issue. Recently a high level team of IMF representatives left
with negative impressions on the overall situation prevailing in the
country. Without making any promises for further cooperation the team
clearly directed the government to begin reformation in the economic sector
with the establishment of transparency and good governance without which they
said they are unable to make any recommendations.
Another high-level team to discuss the loan situation is expected to come to Bangladesh
in April next. If the discussion gets fruitful by that time, Bangladesh
may be able to clinch a 1,800 million US dollar loan in three years from