Bangladesh has urged for loan negotiations with the International Monetary Fund (IMF), becoming the most latest country from South Asia to do so, according to Reuters.
A H M Mustafa Kamal, Bangladesh’s finance minister, told the Prothom Alo newspaper that although negotiations had begun, the economy was “in no way in trouble.”
In a letter submitted to the IMF on Sunday, Kamal claimed that he did not mention exact figure. The administration has not yet determined how much money it needs, according to two sources with knowledge of the case, who declined to be named since only the finance minister is permitted to speak to the media.
On Tuesday, a senior IMF source told Reuters that Bangladesh had requested to begin negotiations on a fresh loan under the Resilience and Sustainability Trust program of the international lender. Such funds are limited to a maximum of $1 billion or 150 % of a country’s quota in Bangladesh’s case.
Bangladesh wants $4.5 billion from the IMF, according to a story in Bangladesh’s Daily Star newspaper on Tuesday.
The $416 billion economy of the country has long been among the fastest-growing in the world, but the Russia-Ukraine war’s rising energy and food costs have increased its import bill and current account deficit.
Bangladesh’s export-oriented garment sector, which is the backbone of the country’s economy, might be negatively impacted if sales decline in its major markets of Europe and the US as a result of a recession in the world economy. Remittances are Bangladesh’s second-largest source of foreign cash, behind clothing.
As of July 20, its foreign exchange reserves were down from $45.5 billion to $39.67 billion, or 5.3 months’ worth of imports.
The country’s current account deficit from July to May was $17.2 billion, up from a deficit of $2.78 billion in the same period the previous year as both its trade deficit and remittances decreased.
The other two South Asian nations that have asked the IMF for aid this year are Sri Lanka and Pakistan.
