IMF reaffirms support in fighting economic challenges

The International Monetary Fund (IMF) has reaffirmed its support for Bangladesh’s interim government in overcoming the various economic challenges the country has been facing in recent times.
In a statement issued yesterday upon completion of its fact-finding mission’s visit to Dhaka, the IMF said the country’s financial sector vulnerabilities have become more pronounced.
“We support the authorities’ efforts to initiate policy adjustments, including continued monetary tightening and rationalising non-priority capital spending, in response to these challenging circumstances,” the lender said in the statement.
After assuming office, the interim government sought a fresh $3 billion loan from the IMF in addition to the ongoing $4.7 billion loan programme approved in January of last year.
Of the $4.7 billion, $2.3 billion has already been disbursed.
The multilateral lender said further discussions on renewed support would be held during the upcoming 2024 IMF-World Bank Annual Meetings in Washington DC from October 22.
From September 24 to 30, the IMF mission team, led by Chris Papageorgiou, visited Dhaka to discuss needs assessments and identify economic challenges.
After the visit, the IMF said that “economic activity has slowed markedly while inflation remains at double-digit levels owing to the recent turbulence and major floods.
“The deterioration in the balance of payments has put additional pressure on foreign exchange reserves. Concurrently, tax revenue collection has declined, while spending pressures have increased and domestic payment arrears have accumulated.
“Financial sector vulnerabilities have become more pronounced,” the IMF said.
“In this context, the authorities and IMF staff have held open and productive discussions on the policies and reforms needed to address these emerging challenges,” the statement continued.
“The IMF remains a steadfast partner, fully committed to supporting Bangladesh and its people,” it added.
“Within the framework of the ongoing IMF-supported programme, we will continue to work closely with the authorities to advance Bangladesh’s reform agenda, which aims to ensure macroeconomic stability, promote job creation, strengthen institutions, and foster strong, sustainable and equitable growth.”
“We welcome the authorities’ renewed commitment to implementing the reforms under the IMF-supported programme. Discussions on how to proceed with programme reviews will continue during the upcoming 2024 IMF-World Bank Annual Meetings,” the statement added.
IMF Managing Director Kristalina Georgieva met with Chief Adviser Prof Muhammad Yunus in New York on the sidelines of the United Nations General Assembly last week.
At the meeting, the IMF assured the interim government of providing more loans on a “fast-track” basis.
Georgieva said the IMF “would fast-track financial support for the government” and that she had sent a team to Bangladesh “quickly”.
The team will submit its report to the IMF management board this month.
Georgieva also said the IMF board could initiate a new lending programme for Bangladesh based on the team’s report or could extend the existing loan program.
During their visit to Dhaka, the IMF team met with Finance Adviser Salehuddin Ahmed, Bangladesh Bank Governor Ahsan H Mansur and other senior officials.
They also met with representatives from the private sector, think-tanks, bilateral donors and development partners.
In the statement, the global lender expressed sorrow over the deaths during the student-led mass uprising.
“We are deeply saddened by the loss of lives and injuries during the recent public uprising and stand in solidarity with the people of Bangladesh during these difficult times,” it said.
“The timely formation of an interim government has helped stabilise political and security conditions, fostering a gradual return to normalcy in the economy,” it added.