IMF approves $278 mn aid to Bangladesh

PTI Washington | Updated on March 12, 2018

The International Monetary Fund (IMF) has approved a financial aid of $ 278.8 million to Bangladesh.

The IMF Executive Board in its meeting yesterday also approved the country’s request for a waiver for non-observance of the performance criterion on new non-concessional external debt maturing in more than one year, a press release said.

“Macroeconomic pressures have eased in Bangladesh, aided by stabilisation measures aimed at containing government borrowing, reducing the inflation rate, and building foreign reserves.

“While the global economic situation remains fragile, Bangladesh’s economy continues to show resilience, with growth this fiscal year expected to slow only moderately,” said Naoyuki Shinohara, IMF Deputy Managing Director and Acting Chair.

“However, risks remain to the downside, mainly arising from a slowdown of exports to mature markets, spike in world commodity prices, further deterioration in state bank finances, and election-year uncertainty,” Shinohara said.

Stating that the fiscal policy has remained broadly on track, he said but underperforming tax collections, related mainly to the trade slowdown, require upfront actions to broaden the tax base and strengthen enforcement.

“Continued vigilance is needed to contain energy and fertiliser related outlays, while improving the reach of safety nets, all with a view to creating more space for growth-critical development spending.

The Government’s debt management strategy should focus on utilising concessional and selective non-concessional borrowing to ensure debt sustainability,” the IMF official said.

“Bangladesh Bank’s monetary policy has helped reduce credit growth and inflationary pressures, but recent easing, while modest, should proceed further only when macroeconomic and financial stability is firmly established. Policy effectiveness will be enhanced by continued exchange rate and interest rate flexibility,” Shinohara said.

Published on February 21, 2013

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