IMF board to consider Bangladesh loan package this month

Dhaka, Jan 9 (EFE).- The International Monetary Fund (IMF) said Monday its Executive Board was expected on Jan.30 to consider a $4.5 billion credit plan for Bangladesh to help the country deal with the financial crisis.

The Washington-based global lender issued a statement in this regard after its Deputy Managing Director Antoinette M. Sayeh held a meeting with Bangladesh Prime Minister Sheikh Hasina at her office.

Bangladesh and the IMF team reached “a staff-level agreement” in October to support the authorities’ economic policies under a new plan for a 42-month credit of about $3.2 billion under the Extended Credit Facility and the Extended Fund Facility.

Another $1.3 billion is expected to be provided under the Resilience and Sustainability Facility, according to an IMF report.

The agreement, which needs to be approved by the IMF’s executive board, was finalized at the end of a two-week visit to Dhaka by a technical delegation of the financial institution, in which both parties discussed the terms of the loan and the country’s financial situation.

Sayeh also held a meeting with finance minister AHM Mustafa Kamal and Bangladesh’s central bank governor Abdur Rouf Talukder, among other senior government officials.

“Just like countries around the world, Bangladesh is now dealing with the impact of global shocks – first from the pandemic and then from the ongoing war in Ukraine,” Sayeh said in a statement after her meeting with Hasina.

“We discussed the impact of these shocks on Bangladesh’s economy, and I welcomed Bangladesh’s comprehensive set of measures to deal with them – including their focus on ensuring protection for the vulnerable during these difficult times,” she said.

Hasina, on her part, stressed that Bangladesh did not want any bail-out from the IMF, but rather sought the assistance as a preemptive measure.

“We don’t want any bail-out. Our this program is not a bail-out,” she said, according to state-run Bangladesh Sangbad Sangstha news agency.

The terms and implications of the loan has been among the main concerns of Prime Minister Sheikh Hasina’s administration, as Bangladesh grapples with high inflation and soaring fuel prices.

Inflation in the Asian country has remained high in recent months, reaching 7.48 percent in July and 7.56 percent in June, marking a nine-year high.

The authorities raised the price of fuel by almost 51 percent in August, which further drove inflation to 9.52 percent that month.

Inflation remained consistently high at 9.10 percent in September, 8.91 percent in October, 8.85 in November and 8.71 in December, according to Bangladesh Bureau of Statistics.

The Bangladesh government, in an executive order on Thursday, increased the average retail electricity price by five percent, raising fears of a further increase in inflation.

Sayeh said that during her discussion with Bangladeshi authorities, they focused on the key elements of this program, including the long-standing challenges of raising tax revenues, and building a more efficient financial sector.

“Reforms in these areas, combined with measures to facilitate private investments and export diversification will help create conditions to make Bangladesh’s economy more resilient and support long-term, inclusive and sustainable growth,” she said.

Bangladesh is currently facing a severe dollar crisis, with the country’s foreign exchange reserves dropping to $33.748 billion in December 2022 from $46.154 in December 2021. EFE

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