Bangladesh has received USD 115 million in the third tranche of the International Monetary Fund (IMF) loan. Besides, Bangladesh has received another 90 million dollars of various financial aid loans from South Korea, World Bank and Islamic Development Bank (IDB). A total of $201 million in loan assistance has been added to the country’s foreign exchange savings or reserves.
This money was added to the foreign exchange reserves of Bangladesh Bank on Thursday (June 27) night.
According to the data of Bangladesh Bank, as of June 26, the gross reserve was 24.63 billion dollars. According to International Monetary Fund (IMF) terms of BPM-6 manual, gross reserves are $19.47 billion. Reserves increased to 26.5 billion dollars on Thursday due to the addition of loans from IMF and other donor organizations and about 21.5 billion dollars in BPM-6 account.
Before this, last Monday (June 24) in the meeting of the executive board of the organization held at the head office of the IMF in Washington, the third installment of the loan for Bangladesh was approved
$476.27 million of the first installment of the IMF’s $4.70 billion loan came in February 2023. And as the second installment, about 681 million dollars came in December last year.
Due to various global and domestic factors, foreign exchange reserves have come under great pressure due to increased import costs post-Covid-19. Bangladesh’s current account deficit also increased due to a large trade deficit. If the rupee depreciates against the dollar, it affects the price of fuel and imports.
In July 2022, Bangladesh applied for a loan of 4.7 billion dollars from the IMF to increase the rapidly depleting reserves. The company approved the loan agreement in November of that year after several rounds of negotiations.
Later, on January 30, 2023, Bangladesh entered into a loan agreement of 4.7 billion dollars with the IMF. Three days later, the company released 476.2 million 70 thousand dollars in the first installment. After this, on December 16 last year, the second installment of 682 million dollars was released.
As per the agreement, the loan is to be fully repaid in seven installments till 2026. Subsequent installments of the second installment were to have equal amounts. But Bangladesh wants more money in the third and fourth installments as the reserve is further reduced. The agency has already agreed to pay $111.5 million instead of $68 million in the third tranche due to the implementation of several tough conditions and the promise of bigger reforms in the future. However, the total loan amount and tenure will remain the same.
At the request of Bangladesh, the net reserve target for the fourth installment at the end of June has been reduced by 5.34 billion dollars to 14.76 billion dollars. Although on track to meet many conditions, Bangladesh has not been able to meet any of the quarterly reserve targets since the start of the loan program. At the request of the government, the IMF later revised and lowered the target.