IMF loan will be disbursed to Bangladesh in seven installments, spanning a period of three and a half years, culminating in 2026.
It is anticipated that Bangladesh will obtain the second tranche of the $4.7 billion loan from the IMF by November of this year. Bangladesh Bank’s foreign exchange reserves have dipped below the IMF’s designated threshold, raising apprehensions about the forthcoming loan installment. Nonetheless, Bangladesh Bank remains optimistic about the punctual disbursement of the loan’s second tranche.
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Recently, a delegation from Bangladesh engaged in multiple meetings with their counterparts from the IMF. During these discussions, the IMF representatives provided assurance regarding the prompt disbursement of the loan’s second tranche.
A senior official from the finance ministry stated, ‘The International Monetary Fund (IMF) officials have made several visits to Dhaka and have acknowledged satisfactory progress across various sectors. The upcoming installment of the loan will adhere to the designated schedule.’
In the meantime, Bangladesh has undertaken reforms in specific sectors and updated pertinent information in accordance with the IMF’s stipulations. Consequently, there exist no uncertainties regarding the timely reception of the subsequent loan installment from the global lending institution.
First instalment of IMF’s loan
The team, led by IMF Asia and Pacific Division Head Rahul Anand, will comprise three to four members, according to sources within the Ministry of Finance who spoke on condition of anonymity Bangladesh has received the initial instalment of $476.2 million from the International Monetary Fund (IMF) out of the total approved loan amount of $4.7 billion on January 30th. The visit is expected to focus on the progress made by Bangladesh in meeting the conditions attached to the loan, including the implementation of necessary reforms in the financial sector and fiscal management.
The loan obtained from the International Monetary Fund (IMF) is said to be paid in seven instalments over a period of three and a half years until 2026, with six instalments remaining.
According to a senior ministry official, the IMF typically reviews compliance with loan conditions before disbursing each tranche. An IMF team is expected to visit in September to assess the fulfilment of loan conditions before releasing the second tranche.
Sources report that it is customary for an IMF mission to visit Dhaka prior to each budget announcement to discuss budget assistance. With the loan program in place, discussions will also cover the fulfilment of loan conditions in addition to budget assistance.
Bangladesh became the first country in Asia to receive a loan from the fund created for low and middle-income countries that are at risk due to climate change. According to a press release from IMF on 31 January, the 42-month program will help preserve macroeconomic stability, protect the vulnerable, and foster inclusive and green growth. Reforms will focus on creating fiscal space to enable greater social and developmental spending; strengthening the financial sector; modernizing policy frameworks; and building climate resilience.
According to IMF Bangladesh’s robust economic recovery from the pandemic has been interrupted by Russia’s war in Ukraine, leading to a sharp widening of Bangladesh’s current account deficit, depreciation of the Taka and a decline in foreign exchange reserves.