IMF stands in way of Biman’s sovereign guaranteeShakhawat Hossain
The government has not given sovereign guarantee of credit to the loss-making Bangladesh Biman despite repeated requests by the United States because of its deal with the International Monetary Fund.
Finance ministry officials said the government was not in a position to offer any guarantee to the national flag carrier, because of conditions tagged by the IMF under the deal called the Extended Credit Facility.
The state-owned Biman badly needs the guarantee to clear payment of more than $300 million for taking delivery of two aircraft from the US aviation giant Boeing next year as per a 2008 deal between the two sides.
It has already taken delivery of two aircraft last year as part of a $1.3 billion purchase deal for a total of 10 planes.
The US ambassador in Dhaka, Dan Mozena, has already urged the finance minister, AMA Muhith, to give Biman the sovereign guarantee after repeated pleas by the manufacturing company yielded no positive results.
In a letter sent early this month to the finance minister, the US ambassador said Biman had already missed a number of deadlines ‘for pre-delivery payments for the next two aircraft’ from the manufacturers.
He said that Boeing had been forced to postpone the delivery until April-May 2014 with a new deadline set for October 1, 2012.
Boeing has, moreover, waived $42 million in interest, fees and pricing adjustment that would normally accrue after Biman missed the original deadline, Mozena said.
The IMF has committed to give $987 million in loan over the next three years after the cash-strapped government sought financial assistance early this year to meet the balance of payment which went negative.
The government has already received around $150 million after it pledged to implement more than a dozen of conditions and go by some stringent rules under the deal.
Providing sovereign guarantee of credit not more than $1 billion in a year is one of the rules the IMF wanted the government to comply with. This particular commitment gives the government no chance to offer additional sovereign guarantee to any state-owned entity after it has almost exhausted its ability for the current year, said the finance ministry officials.
The finance ministry officials pointed out that the government provided sovereign guarantee to the state-owned banks by which they were paying the oil import bills to run the costly and oil-guzzling rental power plants.
They said the finance division had already apprised the finance minister of the overall situation. The division, however, suggested that the government should arrange the fund from alternative sources and assured of necessary cooperation in this regard.
The civil aviation and tourism minister, Faruk Khan, said Biman should get rid of its age-old fleet to reduce its annual losses which had crossed Tk 10 billion in the last fiscal year.
Biman has 12 planes in its fleet, 10 of which are 25 years old. The authorities need to spend a whole lot of money on keeping the old planes fit for flying. It has been struggling to maintain flight schedules.
The fuel price increase on the international market was another reason for Biman’s staggering losses, he said.
The finance ministry officials said that Muhith had a meeting on Biman in early July to discuss the overall situation of Biman. The minister expressed dismay over the growing losses.
Mismanagement and inefficiency are attributed to the growing losses of Biman which counted losses for almost a half of its 40 years of existence.
Biman’s annual losses in 2010-11 stood at Tk 1.9 billion and in 2009-2010 at Tk 410 million.
comments powered by Disqus