Bangladesh reaches initial IMF pact for $6.3 billion loan
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Bangladesh sought support from creditors to fortify its finances after elevated energy prices caused power outages.
PHOTO: AFP
DHAKA - Bangladesh reached a staff-level agreement with the International Monetary Fund for a US$4.5 billion (S$6.29 billion) loan, a key step that would allow the nation to buffer its economy amid dwindling foreign exchange reserves.
The IMF and Bangladesh agreed on US$3.2 billion under the extended credit facility and US$1.3 billion under the Resilience and Sustainability Facility, the multilateral creditor said in a statement.
The 42-month programme is meant to cushion the South Asian nation from economic disruptions. It will be subject to approval by the IMF’s management and board in the coming weeks.
“Bangladesh’s robust economic recovery from the pandemic has been interrupted by Russia’s war in Ukraine, leading to a sharp widening of the current account deficit, rapid decline of foreign exchange reserves, rising inflation and slowing growth,” the IMF said.
Bangladesh, with its US$416 billion economy and a robust garments sector that supplies to H&M Hennes & Mauritz AB and Gap Inc, has sought support from creditors to fortify its finances after elevated energy prices caused power outages
The nation’s dollar stockpile had slipped to US$35.75 billion as of Nov 2 - just enough to cover about four months of imports - from US$46.49 billion a year earlier.
The nation has also sought assistance from the World Bank and the Asian Development Bank.
In the staff-level agreement, the IMF programme aims to create additional fiscal space, contain inflation and modernise the monetary policy framework, strengthen the financial sector, boost growth potential and build climate resilience. BLOOMBERG
