(Dhaka, Bangladesh) The International Monetary Fund (IMF) stands ready to support Bangladesh, which recently asked for help to overcome a financial crisis caused by the volatility of energy prices since the Russian invasion of the ‘Ukraine.
Posted at 2:13 p.m.
“The IMF stands ready to support Bangladesh in this request,” a spokesperson for the institution said in a statement.
The amount of aid, however, has “not yet been discussed”, specifies the IMF, indicating that this “will be part of the discussions on the design of the program”.
Dhaka has requested $4.5 billion from the IMF, according to a local daily.
Discussions have been held between the country’s authorities and IMF teams, but the timetable has not been specified, as the fund’s board is currently on leave.
“External conditions have deteriorated sharply and unprecedented global shocks are placing countries like Bangladesh in significant uncertainty,” said the IMF spokesperson.
Bangladesh could thus benefit from the new Resilience and Sustainability Trust Fund (RD Trust Fund, RST in English), as well as “a support program”, for which Dhaka “has proactively expressed its interest”.
This “will provide safeguards in the event of a further deterioration in external conditions, while supporting the country’s efforts to address the longer-term macroeconomic implications of climate change”.
Bangladesh, a poor country in South Asia, is being hit hard by rising global energy prices as utilities struggle to source diesel and gas to meet demand.
The country has thus experienced long power outages in recent weeks, sometimes up to 13 hours a day. This sparked protests in which dozens of people were injured and two killed.
Dhaka introduced “austerity measures” such as electricity rationing, import restrictions and cutbacks in development spending.
The shortages have been aggravated by the depreciation of the local currency, the taka — by around 20% against the dollar, according to economists — and dwindling foreign exchange reserves.
The current account deficit reached $17 billion.
Several South Asian countries are grappling with runaway inflation and deteriorating public finances, including neighboring Sri Lanka which is also negotiating an IMF loan.