The International Monetary Fund (IMF) has approved the release of $689 million in the second tranche of the $4.7 billion loan package allocated for Bangladesh. The Washington-based lender has advised Bangladesh to continue to focus on containing inflation and rebuilding external resilience.
The multilateral lender suggested a calibrated monetary policy tightening, supported by a neutral fiscal stance, and greater exchange rate flexibility to alleviate foreign exchange pressures and rebuild buffers.
The IMF board approved the $4.7 billion loan in January, 2023. In the first tranche, Bangladesh received $447.8 million in February this year. The country is expected to receive the rest in another five tranches.
Alongside the $400 million Bangladesh received as loan from the Asian Development Bank (ADB), the IMF monies will help to ease significant pressure that has been building on Bangladesh’s forex reserves in the last two years.
Bangladesh’s foreign exchange reserves continued to fall with the net reserves standing at US $ 15.82 billion at the end of November this year from record high US $ 48.0 billion in August 2021. Bangladesh’s foreign exchange reserves have been depleting fast since the beginning of the year 2022 due to international turmoil. High import bill, slow growth in export and also a slowdown in remittances have led to dearth of dollars in Bangladesh.
Bangladesh Taka is continuously weakening against the US dollar due to dollar shortage. Bangladesh Bank releases dollars from its foreign reserve to stabilise Taka against USD and to settle imports bills. However, the dollar rate remains volatile in the grey market too.