Dhaka: The International Monetary Fund (IMF) confirmed that it has reached a staff-level agreement with Bangladesh that paves the way for the release of the much-awaited $4.5 billion in loan support.
Rahul Anand, who led an IMF team to Dhaka from October 26 to November 9, made the announcement on Wednesday, saying the agreement is subject to IMF management approval and executive board endorsement, which is expected in the coming weeks, reports Xinhua news agency.
Officials said IMF funds will be divided between the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF).
“The Bangladesh authorities and the IMF team have reached a staff-level agreement to support the authorities’ reform policies under a new 42-month ECF/EFF arrangement of about $3.2 billion (SDR 2.5 billion, equivalent of 231.4 per cent of quota), and a concurrent RSF arrangement of about $1.3 billion (SDR 1 billion, equivalent of 93.8 per cent of quota),” Anand was quoted as saying in a statement.
He said Bangladesh’s robust economic recovery from the pandemic has been interrupted by the Russia-Ukraine war, leading to a sharp widening of current account deficit, rapid decline of foreign exchange reserves, rising inflation and slowing growth.
According to the official, the new ECF/EFF arrangement is aimed at restoring macroeconomic stability and preventing disruptive adjustments to protect the vulnerable, while promoting structural change to support strong, inclusive and green growth.
“We’re getting the loan exactly as we asked for it. All the processes regarding this loan will be completed within the next three months,” Bangladesh Finance Minister AHM Mustafa Kamal told journalists on Wednesday.
“The $4.5 billion that we have asked for will be available in a total of seven installments,” he said, expressing hope that the first installment will be available in February 2023.
The funds will come at an interest rate of 2.2 per cent, he added.
Road Transport and Bridges Minister Obaidul Quader said the country will receive the IMF loan but not with hard conditions.
“We’re aware about the conditions they mentioned earlier. We’ll not accept any conditions that can hurt the country’s interests,” he said.