Now, Bangladesh asks for USD 4.5 bn from IMF

Bangladesh has formally requested for a USD 4.5 bn loan from Washington-based multilateral lender International Monetary Fund (IMF) to tackle the ongoing financial crisis in the country, the country’s media reported.Bangladesh has asked for the loan from the IMF in view of rapidly declining foreign exchange (Forex) reserves, Dhaka Tribune reported.

In a letter to IMF Managing Director Kristalina Georgieva, the government has sought the loan as a balance of payment and budget support as well as to mitigate the effects of climate change on Bangladesh.According to Bangladesh Finance Ministry officials, USD 1.5 billion of the USD 4.5 billion, which the country has sought to mitigate the on-going crisis, would most likely be interest-free and the remaining amount would come at an interest of less than 2 per cent.

An IMF mission is expected to visit Bangladesh in September to negotiate the terms and conditions for the loan, the report said.A deal is expected to be locked by December, and to be placed before the global lender’s board meeting in January, the officials added.Renowned economist Debapriya Bhattacharya, however, said Bangladesh will have to go through several conditions to get a loan from the multilateral lender, which puts harsh conditions in front of the borrower country to get the loan.

“Right now, we have a large trade deficit. At the same time, remittances are also on the decline. There is great pressure on the exchange rate,” the economist explained.

He also said that imports were getting difficult owing to the lack of foreign exchange, and “going to the IMF is logical and the right move at this time of crisis”.

“Sri Lanka’s delay in doing so caused them a huge loss,” Bhattacharya added.

The economist said the IMF money would mainly be used to meet the large deficit in foreign transactions at the moment, and to stabilise the exchange rate of Taka against the dollar by selling dollars.

“However, before receiving this money, the government has to take several steps to show they are responsible in the eyes of the IMF. This is what we call pre-action. Also, they have to take some steps before releasing each installment,” he said.