Bangladesh seeks bailout package from IMF as huge import bill takes toll on economy

New DelhiEdited By: C KrishnasaiUpdated: Jul 29, 2022, 03:10 PM IST

Photograph:(Reuters)

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The South Asia country seeks $4.5bn from the IMF as rising import bill and shrinking exports widen the deficit. Notably, it is the third South Asian country to approach IMF for a rescue package after Sri Lanka and Pakistan

Bangladesh has sought a multibillion-dollar loan from the International Monetary Fund (IMF) after rising food and fuel prices severely impacted its forex reserves.

Notably, it is the third South Asian country to approach IMF seeking a financial rescue package after Sri Lanka and Pakistan.

According to the Daily Star newspaper, the country wanted $4.5bn from the IMF, including budgetary and balance-of-payment support.

“The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on programme design as per the established policies and procedures of the fund,” The Guardian quoted an IMF spokesperson.

“The amount of support will be part of the programme design discussions,” the spokesperson added, without mentioning the potential size of the package.

This comes at a time when the Russia-Ukraine conflict has caused a massive spike in energy and food prices, sending Bangladesh’s balance of payments into deficit.

Since the onset of the pandemic, around 90 countries have approached the IMF, however, only a select few have been forced to seek bailouts to avoid defaulting on loans or being unable to pay bills.

But Bangladesh’s economy has performed better than other South Asian countries partly thanks to its robust export sector, especially the garment trade which brings in valuable foreign currency into the country.

Bangladesh’s finance minister AHM Mustafa Kamal has denied that the country’s facing any economic woes saying that the government would take an IMF loan only if conditions were favourable.

“If the IMF conditions are in favour of the country and compatible with our development policy, we’ll go for it, otherwise not,” Kamal told reporters.

“Seeking a loan from the IMF does not mean Bangladesh’s economy is in bad shape.”

Bangladesh’s foreign exchange reserves fell to $39.7bn in July down from $45.5bn a year earlier. It would cover over five months worth of imports.

(With inputs from agencies)