IMF agrees $4.5 billion support package for Bangladesh

5. IMF Bangladesh
International Monetary Fund representative Rahul Anand speaks during a press conference in Dhaka on November 9, 2022. (Photo: AFP)
DHAKA — The International Monetary Fund (IMF) said Wednesday it reached a preliminary agreement to provide Bangladesh with a $4.5 billion support package to help it cope with soaring energy and food prices.اضافة اعلان

Bangladesh in common with other Asian economies has been hit hard by the sharp rise in prices in the wake of Russia’s invasion of Ukraine, prompting angry street protests.

The South Asian nation of around 170 million people approached the IMF earlier this year for support.

An IMF delegation and Dhaka representatives “reached a staff-level agreement to support Bangladesh’s economic policies” with a total of $4.5 billion under various facilities, the institution said in a statement, adding the deal was subject to IMF management approval.

Bangladesh plans to use the IMF loan to prop up its foreign exchange reserves, which have nosedived from $46 billion to $34 billion.

The Bangladeshi taka has depreciated some 25 percent against the US dollar in recent months, while according to official figures inflation has approached 10 percent — but independent economists say the true figure is closer to 20 percent.

Household budgets have been hit hard and the government has pledged to cap the price of several staple foods, including rice, to quell public discontent.

“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,” said IMF team leader Rahul Anand.

“Even as Bangladesh tackles these immediate challenges, addressing long-standing structural issues remains critical, including threats to macroeconomic stability from climate change,” he added.

The depreciating currency and dwindling foreign exchange reserves have left Bangladesh unable to import sufficient fossil fuels.

Bangladesh’s precarious financial position was compounded this year by unprecedented floods in the northeast, inundating the homes of more than seven million people and causing nearly $10 billion in damage, according to government estimates.

Bangladesh hopes to graduate from Least Developed Country status and become a “middle-income” nation by 2031.

The current administration has put together a program, which the IMF said it supports, to achieve the goal, as well as measures to contain inflation, change its monetary policy framework, and strengthen the financial sector.

Bangladesh will also support large-scale climate investments and seek additional climate financing.

Elsewhere in the region, Sri Lanka has also sought a bailout from the IMF, its economic crisis — which saw its president ousted by street protests — exacerbated by the global rise in energy and food prices.

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