Bangladesh’s deal with the International Monetary Fund for $4.5 billion in loans will help widen the country’s access to credit from other agencies or countries in the midst of a crisis and catalyse reforms in the economy.
The 42-month arrangement includes $3.2 billion under the extended credit facility and $1.3 billion under the Resilience and Sustainability Facility (RSF).
The RSF is expected to catalyse climate financing and reduce balance of payment pressures from import-intensive climate investment, the IMF said in a statement.
After a meeting with Finance Minister AHM Mustafa Kamal in Dhaka on Wednesday, IMF delegation head Rahul Anand said the RSF will expand the fiscal space to finance climate priorities identified in the authorities’ plans, “including by catalysing other financing, and reducing external pressures from import-intensive climate investment”.
The IMF board is expected to approve the funding soon and Bangladesh expects to receive the first instalment of the loan in February 2023.
Kamal said: “The IMF has checked all our data. If the IMF is with us, if it agrees to lend us, you’ll have to understand that no country will say ‘No’ to us.”
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, also said the IMF loans will be comforting for Bangladesh. “The World Bank, Asian Development Bank and other organisations do not look at macroeconomy if a loan package is secured from such an organisation [as the IMF].”
