Bangladesh: IMF approves aid of 4.7 billion dollars
The Executive Board of the International Monetary Fund (IMF) on Monday approved a $4.7 billion loan to Bangladesh to help weather the economic crisis linked to rising world commodity prices food and energy, according to a press release from the institution.
The Board of Directors approved Bangladesh's request for $3.3 billion under the Extended Credit Facility (ECF) and Extended Credit Facility (MEDC), as well as $1.4 billion under Resilience and Sustainability Facility (RSF).
Bangladesh is the first Asian country to benefit from the RDF.
“Multiple shocks have made macroeconomic management difficult in Bangladesh,” Antoinette Sayeh, deputy managing director of the IMF, said in a statement on Tuesday.
“The authorities must accelerate their ambitious reform agenda to achieve more resilient, inclusive and sustainable growth,” she added.
Last November, an IMF delegation and representatives from Dhaka had reached a preliminary agreement “to support the economic policies of Bangladesh” with a total envelope of 4.5 billion dollars.
The approval of the board of directors allows the immediate disbursement of approximately $476 million.
Like Sri Lanka in particular, Bangladesh has been hard hit by the sharp rise in world food and energy prices following the invasion of Ukraine by Russia last February.
In recent months, the South Asian country of 170 million people has experienced long power cuts as utilities struggle to get diesel and gas supplies.
Dhaka had to introduce “austerity measures”. The country's foreign exchange reserves currently stand at $32 billion, up from $46 billion a year earlier.
The Bangladeshi taka has depreciated by about 25% against the dollar.
Due to this depreciation and dwindling foreign exchange reserves, Bangladesh is struggling to finance the import of fossil fuels, causing fuel prices to rise sharply.
In August, the government raised oil and diesel prices by nearly 50%.
The official inflation rate is 8.71%, but independent economists say the real figure is around 20%.
The main opposition Bangladesh Nationalist Party (BNP) holds the government responsible for the crisis, accusing it of wasting billions of dollars in futile projects.
The opposition has staged protests in recent months calling for the resignation of Prime Minister Sheikh Hasina and the ten general elections under an interim government.