The International Monetary Fund (IMF) has finally approved a $1.3 billion disbursement of the third and fourth tranches of Bangladesh’s $4.7 billion loan program.
This amount, covering both the third and fourth tranches, is expected to be deposited into Bangladesh’s account on June 26, said a press release issued by the IMF.
Further, the IMF Executive Board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions, based on the temporary nature of the non-observance and the implementation of corrective measures, said the release.
Bangladesh’s macroeconomic challenges have increased since the popular uprising in the summer of 2024, which led to the ouster of the previous government and the formation of an interim government. However, the economic outlook has worsened due to persistent political uncertainty, continuation of a tighter policy mix, rising trade barriers, and increasing stress in the banking sector, said the IMF release.
The IMF initially approved the $4.7 billion loan proposal for Bangladesh on January 31, 2023, for a period of three and a half years.
At the time, the IMF stated that the loan program aimed to help Bangladesh maintain macroeconomic stability, protect vulnerable and marginalised populations, and foster inclusive and environmentally sustainable growth. The then-Awami League government had sought the loan primarily due to a widening current account deficit, depreciation of the Bangladeshi Taka, and declining foreign exchange reserves.
The release of these two tranches is expected to provide much-needed support to Bangladesh’s economy, which has been grappling with external sector challenges.
