32.1 C
Delhi
Monday, July 15, 2024

IMF allows $4.5bln support package for Bangladesh to curb Inflation

DHAKA: The International Monetary Fund (IMF) said on Wednesday it had reached a tentative agreement to provide Bangladesh with a $4.5 billion support package to help it cope with soaring energy and food prices.

Bangladesh, like other Asian economies, has been hit hard by a spike in prices in the wake of Russia’s invasion of Ukraine, which has sparked angry street protests.

The South Asian nation of around 170 million people turned to the IMF for support earlier this year.

The IMF delegation and Dhaka representatives “reached a staff-level agreement to support Bangladesh’s economic policies” totaling $4.5 billion under various facilities, the institution said in a statement, adding that the deal is subject to IMF management approval.

Bangladesh plans to use an IMF loan to shore up its foreign exchange reserves, which have plummeted from $46 billion to $34 billion.

The Bangladeshi taka has depreciated about 25 percent against the dollar in recent months, while inflation has hovered closer to 10 percent, according to official figures — but independent economists say the real figure is closer to 20 percent.

Household budgets have been hit hard and the government has pledged to cap the price of several staple foods, including rice, to quell public discontent.

“Bangladesh’s rapid post-pandemic economic recovery was interrupted by Russia’s war in Ukraine, leading to a sharp widening of the current account deficit, a rapid decline in foreign exchange reserves, rising inflation and a slowdown in growth,” said IMF team leader Rahul Anand.

“Even as Bangladesh addresses these immediate challenges, addressing long-term structural challenges remains critical, including threats to macroeconomic stability from climate change,” he added.

Posted in Dawn, November 10, 2022

Most Popular Articles