IMF says ready to support Bangladesh after loan request
DHAKA (Reuters) – The International Monetary Fund (IMF) said on Wednesday it would discuss with Bangladesh its loan request after the country became the third South Asian country to seek such support after Pakistan and Sri Lanka.
Bangladesh’s economy, worth $416 billion, has been one of the fastest growing in the world for years, but rising energy and food prices due to the Russian-Ukrainian war inflated its import bill and current account deficit.
The IMF said Bangladesh was interested in its new Resilience and Sustainability Facility aimed at helping countries cope with the challenges of climate change and had also requested negotiations for an “accompanying IMF programme”.
“The IMF stands ready to support Bangladesh, and staff will engage with the authorities on the design of the program in accordance with the Fund’s established policies and procedures,” an IMF spokesperson said. “The amount of support will be part of program design discussions.”
Earlier in the day, Bangladesh’s finance minister told reporters that the government would only accept an IMF loan if the terms were favorable and said the country’s macroeconomic conditions were good.
“If the IMF conditions are favorable to the country and compatible with our development policy, we will participate, if not not,” said Minister AHM Mustafa Kamal. “Asking for an IMF loan does not mean Bangladesh’s economy is in bad shape.”
The IMF’s Resilience and Sustainability Trust caps funds at 150% of a country’s quota or, in the case of Bangladesh, a maximum of $1 billion.
Bangladesh’s Daily Star newspaper reported on Tuesday that overall the country wants $4.5 billion from the IMF, including for fiscal and balance-of-payments support.
The country’s economic mainstay is its export-oriented garment industry, which is bracing for a downturn as key customers like Walmart grapple with a backlog as inflation forces people to prioritize clothing. essential.
After clothes, remittances are the second largest source of foreign currency for Bangladesh, a country of nearly 170 million people.
Its foreign exchange reserves fell to $39.67 billion as of July 20 – enough for just over five months of imports – from $45.5 billion a year earlier.
Its July-May current account deficit was $17.2 billion, down from a deficit of $2.78 billion in the year-ago period, as its trade deficit widened and remittances have declined.
(Additional reporting and writing by Krishna N. Das; Editing by Kim Coghill and David Holmes)
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