What Bangladesh's new IMF programme should be designed to deliver

What Bangladesh's new IMF programme should be designed to deliver On 4 October, at an investor event in Dhaka, the finance minister said Bangladesh had cancelled its IMF programme because its conditions were unacceptable and would raise money from the market instead. Twelve days later, in Bangkok, he said the proposals were acceptable in principle and that officials would spend the next fortnight working through the details. The change in tone matters. Bangladesh is again negotiating with the institution whose conditions it had publicly rejected. Bangladesh is reported to be seeking a new programme worth $4.5 billion, with officials hoping for an agreement by the end of the year. The amount and timetable remain subject to negotiation. The more useful question is what that agreement should deliver beyond the money. Much of the discussion in Dhaka has been about whether $4.5 billion is enough and whether its conditions are acceptable. Investors will also ask what the programme says about the government's ability to carry out reforms. The lesson is not that any asset sale will attract foreign funds. A large, well-prepared offer could draw attention, but investors would still need reliable accounts, sound governance and a convincing valuation. Moody's returned Bangladesh's outlook to stable in September but continued to identify engagement with the IMF as an important source of support for external financing and reform. An IMF programme is a loan, but it also signals whether the government has agreed to a credible economic plan. At the same time, Bangladesh is preparing a debut international sovereign bond of up to $1bn. The order in which the programme and the bond proceed could affect how investors assess the offer. An agreed reform plan would give them more to work with than promises made while negotiations remain unfinished. I worked on Pakistan's state-asset sales under its 2013 IMF programme, and the sequence offers a useful comparison.