The International Monetary Fund (IMF) has approved over $1.3 billion as fourth and fifth instalments of its $4.7 billion loans to Bangladesh.
“The IMF Executive Board concluded the combined third and fourth reviews of Bangladesh’s arrangements under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and approved an extension, augmentation and rephasing of access. This decision provides Bangladesh with immediate access to about $884 million,” the lender said in a statement issued on Monday.
Bangladesh’s program performance has been broadly satisfactory despite the difficult political and economic context and increased downside risks. Advancing the reform agenda is critical to restoring economic stability, protecting the vulnerable, and supporting inclusive and environmentally sustainable growth, it said.
The IMF Executive Board also concluded the combined Third and Fourth Reviews of Bangladesh’s arrangement under the Resilience and Sustainability Facility (RSF), making available about $453 million to support the Bangladesh economy’s resilience to climate change.
Moreover, the IMF Executive Board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions based on the temporary nature of the non-observance and the implementation of corrective measures, reads the release.
Bangladesh’s arrangements under the ECF/EFF/RSF were approved on January 30, 2023, in an amount equivalent to SDR 2.5 billion (154.3 percent of quota or about US$3.3 billion) under the ECF/EFF and SDR 1 billion (93.8 percent of quota or about US$1.4 billion) under the RSF (PR no. 23/25).
The augmentation approved by the Executive Board today brings the total financial assistance under the ECF and EFF arrangements to SDR 3,035.65 million (about US$ 4.1billion), alongside concurrent RSF arrangements of SDR 1 billion (about US$1.4 billion).
The enlarged enhanced ECF/EFF is aimed at restoring macroeconomic stability, promoting inclusive growth, and protecting the vulnerable. The RSF arrangement has secured fiscal space needed to build resilience against climate risks.
The IMF says Bangladesh’s macroeconomic challenges have increased since the popular uprising in the summer of 2024, which led to the ouster of the previous government.
The timely formation of an interim government has helped stabilize political and security conditions, fostering a gradual return to economic stability. However, the economic outlook has worsened due to persistent political uncertainty, continuation of tighter policy mix, rising trade barriers, and increasing stress in the banking sector, it also said.