Bangladesh has approached the IMF for a multibillion-dollar loan, making it the newest South Asian nation to hunt worldwide monetary help as rising meals and gas costs globally pressure rising economies.
The IMF stated Bangladesh has contacted it to start out negotiations for a programme, including that it was in search of a “Resilience and Sustainability” facility designed to assist international locations adapt to local weather change. Local media in Bangladesh reported that the federal government was in search of $4.5bn.
“The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on program design,” the IMF stated. The IMF didn’t touch upon the potential measurement of the bundle, including that “the amount of support will be part of the program design discussions”.
Bangladesh’s method to the IMF comes as close by Sri Lanka and Pakistan have additionally sought help. Both international locations have been hit by inflation, dwindling international reserves and ensuing home political upheaval.
Sri Lanka’s woes, specifically, have turned the nation into an emblem of the political and financial risks of surging commodity costs following Russia’s invasion of Ukraine this 12 months.
Former Sri Lankan president Gotabaya Rajapaksa resigned and fled abroad earlier this month in response to widespread protests in opposition to his rule. Crippling shortages of gas, drugs and meals have prompted a dramatic decline in residing requirements because the nation defaulted on its international money owed of greater than $50bn in May.
Many analysts fear that Pakistan might observe Sri Lanka in defaulting on its international debt except it manages to stabilise its international reserves and currency.
Bangladesh has been higher positioned than different South Asian international locations thanks partly to its stronger export sector, with the garment trade a invaluable supply of international currency.
It is now additionally fighting a rising import invoice, however Bangladeshi officers dismissed solutions that the nation was dealing with a disaster. They argued that Bangladesh’s international currency reserves — equal to about 5 months of imports — gave the nation a cushion.
“If the IMF conditions are in favour of the country and compatible with our development policy, we’ll go for it, otherwise not,” AHM Mustafa Kamal, Bangladesh’s finance minister, instructed journalists in Dhaka on Wednesday. “Seeking a loan from the IMF does not mean Bangladesh’s economy is in bad shape.”
Economists are involved that the pressures in South Asia, a area largely depending on vitality imports, will solely intensify.
While Sri Lanka has but to agree phrases with the IMF, Pakistan this month reached a preliminary deal for a $1.3bn loan, as a part of an present $7bn help bundle.
Pakistan’s central financial institution governor Murtaza Syed instructed the Financial Times in an interview this week that he hoped the IMF would finalise the deal subsequent month. “We have the cover of the IMF programme during what is going to be a very difficult 12 months globally,” he stated.