The International Monetary Fund (IMF) said it is willing to initiate talks with Bangladesh over its request for a $4.5 billion loan as concerns swirl over whether the South Asian nation will join neighbours Sri Lanka and Pakistan in financial turmoil.
Known for its garment-exporting industry, Bangladesh needs the funds for its balance of payment and budgetary needs, as well as for efforts to deal with climate change.
The country’s $416 billion economy has been one of the fastest-growing in the world for years, but rising energy and food prices because of the Russia-Ukraine war have inflated its import bill and the current account deficit.
Finance Minister Mustafa Kamal wrote to IMF managing director Kristalina Georgieva on Sunday.
A senior finance ministry official, who did not want to be named, said the matter was indeed “being discussed” but declined to give details.
Kamal and the IMF office in Bangladesh, a country of more than 165 million people, did not respond to requests for comment.
Atiur Rahman, a former central bank governor, welcomed any approach to the IMF, saying the country should seek long-term, low-interest rates from international institutes in exchange for broader economic reforms like having flexible bank interest rates.
“We have been encouraging the government to do this,” said Rahman on the IMF loan request. “There’s a need for a balance-of-payments support. Exports and remittances alone cannot handle that. You need an extra dose of external funding.”
Bangladesh’s July to May current account deficit was $17.2 billion, compared with a deficit of $2.78 billion in the year-earlier period, according to central bank data, as its trade deficit widened and remittances fell.
- Reuters, with additional editing by George Russell