LONDON: The International Monetary Fund (IMF) provisionally agreed a $4.5 billion support programme for Bangladesh on Wednesday as global inflation and the prospect of lower demand for its garment exports raised risks for its macroeconomic stability.
The IMF said a “staff-level agreement” had been reached for a 42-month arrangement, including about $3.2 billion from its Extended Credit Facility (ECF) and Extended Fund Facility (EFF), plus about $1.3 billion from its new Resilience and Sustainability Facility (RSF).
Bangladesh has become the third country in South Asia to reach a staff-level agreement for loans with the IMF this year after Pakistan and Sri Lanka.
A staff-level agreement is typically subject to approval by IMF management and consideration by its Executive Board. Bangladesh’s $416 billion economy has been one of the fastest-growing in the world for years but rising energy and food prices because of Russia’s invasion of Ukraine have inflated its import bill and current account deficit.
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“The objectives of Bangladesh’s new Fund-supported program are to preserve macroeconomic stability and support strong, inclusive, and green growth, while protecting the vulnerable,” the IMF said in a statement.
Bangladesh’s economic mainstay is its export-oriented garment industry, which is bracing for a slowdown as big customers like Walmart are saddled with excess stocks as inflation forces people to prioritise their spending.
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