July 19, 2024, 3:33 am

Staff Correspondent

2024-06-25 09:23:13 BdST

IMF to release over $1.11b within 2 days: BB

The International Monetary Fund (IMF) has given approval for the release of the 3rd tranche of its $4.7 billion loan package allocated for Bangladesh, according to the Bangladesh Bank (BB).

Talking to journalists on Monday, BB Spokesperson Mezbaul Haque said, "The IMF board has approved the third installment of our credit. We are hoping that $1.115 billion would be released by the next two days."

Following the Executive Board’s discussion, Antoinette M. Sayeh, deputy managing director and acting chair, made the statement on Monday.

The Executive Board of the International Monetary Fund (IMF) completed the second review under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) arrangements for Bangladesh, allowing the authorities to withdraw the equivalent to SDR704.70 million (about $928 million) under the ECF/EFF, and SDR166.68 million (about $220 million) under the RSF.

This brings total disbursements under the ECF/EFF so far to SDR1,409.40 million (about $1,856 million) and under the RSF to SDR333.35 million (about $439 million).

Further, the Executive Board granted a waiver of nonobservance of a performance criterion for the floor on net international reserves on the basis of corrective actions.

Bangladesh’s economy continues to face multiple challenges. Stubbornly high international commodity prices and continued global financial tightening have amplified macroeconomic vulnerabilities.

Although the current account remains compressed, a sudden reversal of the financial account has kept foreign exchange (FX) reserves and the Taka under pressure.

In response to these pressures, the authorities have recently undertaken bold exchange rate reforms.

Real GDP growth slowed to 4.8 percent in FY24H1, while headline inflation reached a decade high of 9.7 percent year-on-year in April 2024.

Looking ahead, real GDP growth is projected at 5.4 percent in FY24, owing to the ongoing import compression and policy tightening, and will pick up to 6.6 percent in FY25 as imports rebound and FX pressures ease.

Inflation is projected to remain elevated at approximately 9.4 percent in FY24 but is anticipated to decline to around 7.2 percent in FY25, on the back of the continued tighter policy mix and projected lower global food and commodity prices.

Following the exchange rate realignment, gross international reserves (GIR) are projected to gradually increase.

Nonetheless, uncertainties around the outlook remain high and risks are tilted to the downside.

Bangladesh’s arrangements under the ECF/EFF and RSF were approved by the Executive Board on January 30, 2023 (see Press Release No. 23/25) in an amount equivalent to SDR2.5 billion (154.3 percent of quota or about $3.3 billion) under the ECF/EFF and SDR1 billion (93.8 percent of quota or about $1.4 billion) under the RSF.

The ECF/EFF arrangement has helped to prevent disruptive adjustments to restore macroeconomic stability and protect the vulnerable while laying the foundations for strong, inclusive, and environmentally sustainable growth.

The concurrent RSF arrangement has supplemented the resources made available under the ECF/EFF to expand the fiscal space to finance the authorities’ climate investment priorities, help catalyze additional financing, and build resilience against climate risks.

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