The executive board of International Monetary Fund (IMF) has approved a US $732 million disbursement to Bangladesh to address the Covid-19 pandemic.
The Covid-19 pandemic is severely impacting the Bangladeshi economy. Two major sources of external financing, namely exports of Ready-Made Garments (RMG) and remittance inflows, are projected to decline rapidly, an IMF press release said on Friday.
Necessary policy responses to prevent a domestic pandemic, including the shutdown of major cities, will inevitably affect economic activities and slow growth.
The disbursement include Special Drawing Rights (SDR) 177.77 million (about US $244 million or 16.67% of quota) under the Rapid Credit Facility (RCF), and a purchase of SDR 355.53 million (about US $488 million or 33.33% of quota) under the Rapid Financing Instrument (RFI).
This will help finance the health, social protection, and macroeconomic stabilization measures, meet the urgent balance-of-payments and fiscal needs arising from the Covid-19 outbreak, and catalyze additional support from the international community, the release added.
The authorities have started implementing several measures to mitigate the impact of the pandemic and preserve the country’s macroeconomic prospects.
In addition to increasing health expenditures, the government’s immediate response has focused on expanding food distribution and cash transfer programs to vulnerable populations, ensuring the payment of wages in export-oriented industries, and facilitating the provision of working capital to businesses and farmers.
The authorities remain committed to promoting strong and inclusive growth while preserving macroeconomic stability.
Key policy challenges include tax revenue mobilization, addressing the non-performing loans in the banking sector, and improving infrastructure and governance to enhance the business environment and attract foreign direct investment, the release further said.
IMF is monitoring Bangladesh’s situation closely and stands ready to provide further advice and support if needed. The authorities have also committed to put in place targeted transparency and accountability measures to ensure the appropriate use of emergency financing.
