The International Monetary Fund (IMF) has approved a disbursement of $1.33 billion to Bangladesh, covering the fourth and fifth tranches of its 42-month support programme, part of a total $4.7 billion loan package.
This approval offers significant relief to the interim government, especially considering the last tranche was released before it assumed office in August of last year.
On June 23, the IMF confirmed that Bangladesh would gain immediate access to $884 million under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements. Additionally, $453 million will be made available through the Resilience and Sustainability Facility (RSF) to address the country’s climate resilience challenges.
The IMF also approved an augmentation of $567.2 million in Special Drawing Rights (SDRs) under the ECF and EFF arrangements, coupled with a six-month extension of the loan agreement. Bangladesh had requested this augmentation in May to manage rising external financing needs and support macroeconomic stability.
In its statement, the IMF acknowledged that Bangladesh’s programme performance has been “broadly satisfactory,” despite the difficult political and economic context and increasing risks.
This disbursement comes amid persistent macroeconomic pressures, including high inflation, low growth, and an external financing gap.
Bangladesh turned to the IMF in the early 2023 for the $4.7 billion loan as the country’s foreign reserves were strained by a global surge in commodity prices, exacerbated by the ongoing Ukraine war, which significantly impacted the country’s ability to pay for essential imports such as fuel and gas.
Since the programme’s approval, Bangladesh has received the first tranche in February 2023, the second tranche later that year and the third tranche in June 2024.
With the approval of the fourth and fifth tranches, Bangladesh now expects to receive the remaining portions of the loan, amounting to over $1 billion, by the middle of next year.
Like the previous ones, the future disbursements will depend on Bangladesh meeting specific reform benchmarks, including those related to fiscal policy and revenue mobilisation.