Dhaka, Dec 18, (V7N) - The International Monetary Fund (IMF) has agreed to provide Bangladesh with a $750 million loan as the third tranche of a $4.7 billion financial assistance package. This agreement follows a staff-level discussion between the IMF and Bangladeshi authorities on the necessary policies to complete the third review of the IMF-supported Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).

An IMF press release confirmed that the agreement reached between the two parties is subject to approval by the IMF’s Executive Board, which is anticipated in the coming weeks. An IMF team led by Chris Papageorgiou visited Dhaka from December 3 to 18, 2024, to discuss the economic and financial policies required for the third review of the loan.

Upon conclusion of the visit, Chris Papageorgiou stated, “We are pleased to announce that the IMF team reached a staff-level agreement with the Bangladesh authorities on the policies needed to complete the third review under the ECF, EFF, and RSF arrangements. The IMF’s Executive Board will consider the completion of the review based on the authorities’ implementation of prior actions.”

While expressing optimism about the agreement, the IMF noted that Bangladesh’s economy faces significant challenges, including slowed economic activity and high inflation. Furthermore, capital outflows, especially from the banking sector, have placed additional pressure on the country’s foreign exchange reserves. The IMF also highlighted a decline in tax revenues and increased spending pressures. These difficulties are compounded by stress in parts of the financial sector.

In response to these economic strains, Bangladesh has requested an augmentation of approximately SDR 567.2 million (around $750 million) in financial support from the IMF under the ECF and EFF arrangements. This would bring the total financial assistance under these two arrangements to SDR 3,035.7 million (roughly $4 billion). Concurrently, the RSF arrangements would provide an additional SDR 1 billion (about $1.3 billion). Upon the completion of the third review, SDR 491.9 million (approximately $645 million) will be made available, consisting of SDR 325.2 million (around $426 million) under the ECF and EFF arrangements and SDR 166.7 million (around $219 million) under the RSF.

This loan is a part of Bangladesh’s ongoing efforts to stabilize its economy amidst significant macroeconomic challenges, and the financial support from the IMF is seen as crucial in helping the country navigate these issues.

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