IMF offers $1 bn credit to Bangladesh
Dhaka: International Monetary Fund (IMF) has approved nearly USD 1 billion credit for Bangladesh to maintain a comfortable balance of payment (BoP) and foreign exchange reserve, officials said Thursday.
"This is the largest ever ECF (extended credit facility) IMF offered to Bangladesh with very flexible conditions... this comes to carry out our own programmes mentioned in the budgetary statement and not theirs (IMF)," Bangladesh Bank governor Atiur Rahman said.
He said the IMF decision came when Bangladesh was facing a little pressure in dealing with the balance of payments.
The credit would also be used to increase the growth rate supplementing budgetary pledges alongside negating the inflationary trends. It was also expected to woo investments, he added.
IMF approved a three-year USD 987 million loan for Bangladesh at a meeting of its Executive Board yesterday in Washington, saying it would immediately disburse USD 141 million of the loan as budget and inflationary pressures had increased recently due to rising subsidy costs.
A Finance Ministry spokesman said Bangladesh got such a credit from IMF for the first time in nine years.
The extended credit facility provides a higher level of access to financing, more concessional terms, enhanced flexibility in programme design, and more focussed and streamlined conditionality, the spokesman added.
"The Board's decision will immediately enable the initial disbursement of an amount equivalent to SDR 91.423 million (about USD 141 million)," an IMF statement said.
It said the extended credit facility arrangement was designed to support the authorities' programme, which aims to restore macroeconomic stability, strengthen the external position, and give rise to higher and more inclusive growth.
IMF mission chief in Dhaka David Cowen said the credit focussed on fiscal and financial reforms, "restrained" monetary policy, and trade and investment, including cutting trade barriers.
During the programme period, the authorities are committed to taking actions to create fiscal space, reinvigorate the financial sector, and catalyse additional resources, to boost social and development-related spending, tackle power shortages and the infrastructure deficit, and stimulate export-oriented investment and job growth.
"The programme encompasses four main reform pillars including fiscal policy and reforms, monetary and exchange rate policy, financial sector reforms and trade and investment reforms to ensure macroeconomic stability, external viability, and sustained growth," the IMF statement said.