IMF clears $1.337-bn payment of 3rd, 4th tranches of Bangladesh's loan

The IMF executive board completed the combined third and fourth reviews of Bangladesh’s arrangements under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).

The board also approved an augmentation of special drawing rights (SDR) worth 567.19 million (53.2 per cent of quota) for the ECF/EFF arrangements and a six-month extension.

Completion of these reviews allows the authorities to immediately withdraw SDR 650.5 million (about $884 million) under the ECF/EFF, and SDR 333.3 million (about $453 million) under the RSF, the IMF said in a release.

Further, the board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions, based on the temporary nature of the non-observance and the implementation of corrective measures.

Bangladesh’s arrangements under the ECF/EFF/RSF were approved on January 30, 2023, in an amount equivalent to SDR 2.5 billion (154.3 per cent of quota or about $3.3 billion) under the ECF/EFF and SDR 1 billion (93.8 per cent of quota or about $1.4 billion) under the RSF.

The augmentation approved by the IMF executive board recently brings the total financial assistance under the ECF and EFF arrangements to SDR 3,035.65 million (about $ 4.1billion), alongside concurrent RSF arrangements of SDR 1 billion (about $1.4 billion).

The enlarged enhanced ECF/EFF is aimed at restoring macroeconomic stability, promoting inclusive growth and protecting the vulnerable, the IMF noted.

The RSF arrangement has secured fiscal space needed to build resilience against climate risks.

Bangladesh’s macroeconomic challenges have increased since the popular uprising in the summer of 2024, and its economic outlook has worsened due to persistent political uncertainty, continuation of tighter policy mix, rising trade barriers and increasing stress in the banking sector, it observed.

Programme performance for the third and fourth reviews remains broadly satisfactory despite the difficult political and economic context, it added.

ALCHEMPro News Desk (DS)