IMF says Bangladesh seeks loan under fund’s Resilience and Sustainability Trust

An official of International Monetary Fund has said Bangladesh asked the fund to start talks on a new loan under the creditor's Resilience and Sustainability Trust (RST).

According to Reuters, IMF's Asia and Pacific Department Director Krishna Srinivasan gave the information on Tuesday. The RST is designed to help countries ensure sustainable growth.

Bangladesh's $416 billion economy is the first in Asia to put such a request forward to the Washington-based lender as it seeks to ramp up its attention on how to mitigate the impact of climate change.

"The RST comes also with an (upper credit tranche) programme, so it's a joint initiative. The amounts will have to be discussed subsequently," Srinivasan told Reuters. This means that Bangladesh will need a regular IMF-supported programme such as a stand-by agreement or an extended fund facility to be able to get this new type of financing.

"This facility is aimed at addressing transformational changes in countries, notably climate change and pandemic preparedness," he said. "One would hope that other countries would also take advantage of this instrument."

RST funds are capped at 150 per cent of a country's quota or, in Bangladesh's case, the maximum of $1 billion.

The IMF expects to begin lending from the RST in October. Low-income and vulnerable middle-income countries can apply to get the financing, which has channelled special drawing rights from countries with strong external positions, according to the fund's website.

The loans will have a 20-year maturity and a 10-1/2-year grace period.

"We would hope that it is one among more to come down the road," Srinivasan said.