IMF says ready to support Bangladesh, programme expected to start in coming months

Bangladesh has requested loans to advance its efforts to manage fiscal, monetary and financial stability risks posed by climate change and recent global developments

News Desk
Published : 3 August 2022, 02:19 PM
Updated : 3 August 2022, 06:21 PM

The International Monetary Fund has reassured Bangladesh of support, saying the Resilience and Sustainability Trust, from which the country sought a loan, will be operationalised in the coming months.

“IMF staff will work with the Bangladesh authorities during this period to design a programme most relevant to its economic and social dynamics,” an IMF spokesperson said in an emailed statement on Wednesday.

The amount of support has not yet been discussed and it will be part of the programme design discussions, the spokesperson added.

Media reports suggested Bangladesh wants $4.5 billion from the global lender.

Bangladesh wrote to the IMF last month, requesting loans to advance its efforts to manage fiscal, monetary and financial stability risks posed by climate change and recent global developments.

Even as Bangladesh tackles immediate challenges created by the Russia-Ukraine war, it recognises the need to respond to the long-term challenge posed by climate change, according to the statement.

The IMF said external conditions have deteriorated sharply, and the unprecedented global shocks present countries like Bangladesh with significant uncertainties.

“As part of the policy response, Bangladesh’s request for an RST and accompanying IMF-supported program will provide safeguards in the event of further deterioration of external conditions, while supporting the country’s efforts to address the longer term macroeconomic implications of climate change.”

The long-term challenge posed by climate change could threaten Bangladesh’s macroeconomic stability and the IMF’s new RST programme aims to provide “affordable”, long-term financing to help build resilience against such long-term risks, the IMF said.

It added Bangladesh sought the support In recognition of its climate-financing needs, and given the need to take precautionary steps to further cushion its economy from ongoing challenges.

Bangladesh's $416 billion economy is the first in Asia to put such a request forward to the Washington-based lender as it seeks to ramp up its attention on how to mitigate the impact of climate change, according to Reuters.

RST funds are capped at 150% of a country's quota or, in Bangladesh's case, the maximum of $1 billion.

The IMF expects to begin lending from the RST in October. Low-income and vulnerable middle-income countries can apply to get the financing, which has channeled special drawing rights from countries with strong external positions, according to the fund's website.

The loans will have a 20-year maturity and a 10-1/2-year grace period.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher