IMF agrees to lend $4.5 billion to Bangladesh and proposes priority reforms

The International Monetary Fund (IMF) recently agreed to lend Bangladesh $4.5 billion to help rebuild its depleting foreign exchange reserves as part of a large-scale reform package. Of the total sum, $3.2 billion will be disbursed under the Extended Credit Facility (ECF) and the Extended Funding Facility (EFF), while $1.3 billion will be disbursed under the for Resilience and Sustainability (RSF).

In granting the loan amount, the IMF highlighted certain reform priorities, including increasing the tax-to-gross domestic product (GDP) ratio, modernizing the monetary policy framework, improving the business climate and mobilizing additional financing to meet spending needs.

The International Monetary Fund has agreed to lend Bangladesh $4.5 billion to help replenish depleting foreign exchange reserves as part of a wide-ranging reform package. Of this total, $3.2 billion will be provided under the Extended Credit Facility and the Extended Funding Facility, while $1.3 billion will be disbursed under the Resilience and Sustainability Facility.

Exchange rate flexibility, improving governance and the regulatory framework in the financial sector, developing capital markets, boosting growth potential and building climate resilience are other priorities cited by the IMF.

The preliminary deal would require approval by the IMF’s executive board in Washington, DC.

A mission made up of IMF officials reached an agreement with the government of Bangladesh after a 15-day visit.

The funds will be available in seven installments by 2026, with the first installment of $447 million arriving in February. The rest will come in six installments, each amounting to $559 million.

With an inherently floating interest rate, the average rate on loans will be 2.2%, Finance Minister AHM Mustafa Kamal was quoted as saying by Bangladeshi media.

According to an IMF statement, greater revenue mobilization and expenditure rationalization will help increase growth-enhancing spending. “The impact on vulnerable people will be mitigated by higher social spending and better targeted social protection programs.”

“The monetary stance will be guided by the outlook for inflation. Modernizing monetary policy will promote macroeconomic stability and improve policy transmission. Increased exchange rate flexibility will help cushion external shocks,” he said. he adds.

Fibre2Fashion (KD) News Desk


Comments are closed.