Dhaka: The International Monetary Fund has signed off on a $4.7 billion support loan package for Bangladesh to help it cope with soaring energy and food costs that have sparked huge protests.
Following Russia's invasion of Ukraine, Bangladesh and other South Asian nations that depend on the import of fossil fuels were severely impacted by substantial increases in living expenses. The energy grid had nationwide outages of up to 13 hours per day last year, and the government provided food assistance to people unable to purchase rice and other necessities.
The IMF package makes $476 million immediately available to the government but commits it to tax hikes and bringing down the number of bad loans in the banking sector.
“Multiple shocks have made macroeconomic management challenging in Bangladesh,” the lender’s active chair Antoinette Sayeh said.
“Authorities need to accelerate their ambitious reform agenda to achieve a more resilient, inclusive, and sustainable growth,” she said. With its foreign exchange reserves plummeting from $46 to $34 billion, Bangladesh intends to use the IMF loan to support them. Since last May, the local currency has lost almost 25% of its value against the US dollar, increasing the cost of selling gasoline and providing electricity, which has had an impact on the rest of the economy.