Bangladesh, IMF reach staff-level deal on 3rd review of loan

The International Monetary Fund (IMF) has consented to provide Bangladesh $ 750 million loan as the third tranche of a $4.7 billion loan.

“IMF and Bangladesh have reached staff-level agreement on the policies needed to complete the 3rd review of IMF supported Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF),” said an IMF press release.

The staff-level agreement is subject to approval by the Executive Board, which is expected in the coming weeks, it said.

An IMF staff team led by Chris Papageorgiou visited Dhaka during December 3–18, 2024 to discuss economic and financial policies in the context of the third review of the IMF- supported loan, reports UNB.

At the end of the visit, Papageorgiou said, “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 completion of the review based on the implementation by the authorities of prior actions.”

“The timely formation of an interim government has fostered a gradual return to economic normalcy. However, economic activity has slowed significantly, and inflation remains elevated. Capital outflows, particularly from the banking sector, have pressured foreign exchange reserves. Additionally, tax revenues have declined, while spending pressures have increased. These challenges are further exacerbated by stress in parts of the financial sector.”

“Amid significant macroeconomic challenges, the authorities requested an augmentation of SDR 567.2 million (approximately US$750 million) in IMF financial support to Bangladesh under the ECF and EFF arrangements. This increase would bring the total financial assistance under the ECF and EFF arrangements to SDR 3,035.7 million (about US$4 billion), alongside concurrent RSF arrangements of SDR 1 billion (about US$1.3 billion). Upon completion of the third review, SDR 491.9 million (about US$645 million) will be made available, comprising SDR 325.2 million (about US$426 million) under the ECF and EFF and SDR 166.7 million (about US$219 million) under the RSF.”