Dhaka is reportedly receiving a $4. 5 billion bailout after being hit by higher import prices and falling exports.
Bangladesh must hold talks with the International Monetary Fund after requesting a bailout to prevent the country from running out of liquidity.
The government in Dhaka, the third in South Asia to request an IMF bailout after Pakistan and Sri Lanka, would want $4. 5 billion (£3. 7 billion) after being hit hard by high import prices, gas and a drop in exports. as the world economy slowed.
The IMF said Bangladesh is also interested in its new Resilience and Sustainability Fund, which aims to help countries cope with demanding climate change situations.
“The IMF is in Bangladesh’s position, and staff will interact with the government in designing the program in accordance with the policies and procedures established by the Fund,” an IMF spokesperson said. “The amount of will be part of the discussions in the design of the program. “
Bangladesh’s $416 billion economy has been one of the fastest developing in the world for years and relies heavily on a garment industry that manufactures stores in Europe, the United States and South America.
However, emerging energy and food costs through Russia’s invasion of Ukraine have inflated Bangladesh’s import bill, leading to a shortfall in its bill balance.
About 90 countries have asked the IMF for help during the pandemic, but only a few have been forced to apply for bailouts to avoid defaulting on their loans or failing to pay their bills.
Overall, the lender of the latest Washington-based hotel is earning about $250 billion, or a quarter of its $1 billion lending capacity, for member countries.
Bangladeshi Finance Minister AHM Mustafa Kamal said the government would only settle for an IMF loan if conditions were favorable, after denying that the underlying financial scenario facing the country of another 170 million people meant draconian reforms were needed.
“If the IMF’s situations are favorable for the country and compatible with our policy of progression, we will participate, if Array,” Kamal said. “Applying for an IMF loan means Bangladesh’s economy is in bad shape. “
The IMF’s Resilience and Sustainability Trust limits the budget to 150 of a country’s quota, broadly reflecting its relative position in the global economy, or in the case of Bangladesh, a maximum of $1 billion.
In the past, IMF officials have insisted that bailouts come with strict demands for transparency about where the budget is spent. The finisher has also demanded an end to subsidies to businesses and families that he considers unaffordable, such as the value of any loan.
Bangladesh’s Daily Star reported that, overall, the country received $4. 5 billion from the IMF, which was added for fiscal and balance of accounts support.
Bangladesh’s foreign exchange reserves fell to $39. 7 billion in July, enough for more than five months of imports, from $45. 5 billion a year earlier.
Its existing July-May account, which measures the gap between exports and imports, posted a deficit of $17. 2 billion, compared with a deficit of $2. 8 billion at the same time last year, as its industry’s deficit widened and remittances fell.