Bangladesh Bank Negotiates $3 Billion Loan with IMF

Bangladesh is in negotiations with the International Monetary Fund (IMF) for an additional $3 billion loan to address economic challenges following recent political upheavals. This development was reported by BBC and Bloomberg. In an interview with Bloomberg, Bangladesh’s newly appointed central bank Governor Ahsan H Mansur explained that the additional funding is essential for the country’s recovery from political turmoil and to manage outstanding debts. Mansur noted that discussions with the IMF are focused on “augmenting” and “front loading” the previously secured $4.7 billion funding from last year.

Bangladesh is also seeking financial support from other international institutions, requesting $1.5 billion from the World Bank, and $1 billion each from the Asian Development Bank and the Japan International Cooperation Agency. The need for extra funds comes as Bangladesh recovers from weeks of severe unrest, including deadly protests that led to the resignation of Prime Minister Sheikh Hasina. The unrest has significantly impacted the country’s garment export sector, a key source of foreign exchange.

Prior to the crisis, Bangladesh’s foreign reserves were already under strain, standing at $20.5 billion as of July 31, which covers about three months of import needs. Since his appointment on August 13, Mansur has overseen the central bank’s purchase of over $200 million from the interbank market, with plans to continue buying up to $1 billion per month. Mansur, who has a long tenure with the IMF, was appointed by the interim government led by Nobel laureate Professor Muhammad Yunus. He emphasized that addressing issues within the banking sector, including recovering funds allegedly embezzled during the previous administration, is a top priority.

The central bank’s recent efforts to stabilize the financial sector come in the wake of significant deposit withdrawals and a rise in non-performing assets linked to alleged financial mismanagement. Mansur stated that his immediate goal is to restore confidence in the financial system and ensure recovery from past irregularities.

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