IMF agrees to US$4.5 billion support package for Bangladesh as floods, energy costs batter South Asian nation

The deal, still subject to IMF management approval, comes after the South Asian nation sought help from the IMF earlier this year

A depreciating currency and dwindling foreign exchange reserves left Bangladesh unable to import sufficient fossil fuels, prices of which have soared because of the Ukraine war

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An IMF delegation and Dhaka representatives “reached a staff-level agreement to support Bangladesh’s economic policies” with a total of US$4.5 billion under various facilities, subject to IMF management approval. Photo: AFP

Published: 7:29pm, 9 Nov 2022

The International Monetary Fund (IMF) said on Wednesday it had reached a preliminary agreement with Bangladesh to provide a support package worth US$4.5 billion.

Bangladesh and other Asian economies has been hit hard by the sharp rise in global food and energy prices in the wake of Russia’s invasion of Ukraine.

An IMF delegation and Dhaka representatives “reached a staff-level agreement to support Bangladesh’s economic policies” with a total of US$4.5 billion under various facilities, the institution said in a statement, adding the deal was subject to IMF management approval.

The package is “aimed at restoring macroeconomic stability and preventing disruptive adjustments to protect the vulnerable, while promoting structural change to support strong inclusive and green growth”, it said.

It would also “expand the fiscal space to finance climate priorities identified in the authorities’ plans, including by catalysing other financing, and reducing external pressures from import-intensive climate investment”, the IMF added.

The South Asian nation of around 170 million people approached the IMF earlier this year for support.

A depreciating currency and dwindling foreign exchange reserves left Bangladesh unable to import sufficient fossil fuels, prices of which have soared because of the Ukraine war.

A man stands next to an eroded section on the banks of river Padma in Munshiganj. Periodic flooding that inundates homes, markets and schools has always been a fact of life for the tens of millions of farmers and fishermen who crowd the rivers’ banks – some of the most densely populated areas of the Bangladeshi countryside. Photo: AFP