Garment workers come out of a factory during the lunch break as factories remain open despite a countrywide lockdown, in Dhaka, Bangladesh, July 6, 2021. REUTERS/Mohammad Ponir Hossain
DHAKA -Bangladesh has asked the International Monetary Fund (IMF) to start negotiations for a loan, the finance minister told the Prothom Alo newspaper, while adding that the economy was “no way in trouble”.
Minister A.H.M. Mustafa Kamal said he did not specify any amount in a letter he sent to the IMF on Sunday. Two sources with knowledge of the matter, who declined to be identified as only the finance minister was authorized to talk to the media, said the government had not yet decided how much money it wanted.
“The IMF was requested to start a formal negotiation to obtain loans for balance of payments and budget assistance,” Kamal said in the Prothom Alo report published on Wednesday.
“When and how much loan will be available will depend on them. As far as our current macroeconomic situation is concerned, we are in no way in trouble.”
Kamal did not respond to requests for comment from Reuters.
A senior IMF official told Reuters on Tuesday that Bangladesh had asked it to start talks on a new loan under the global creditor’s Resilience and Sustainability Trust. Such funds are capped at 150 percent of a country’s quota or, in Bangladesh’s case, the maximum of $1 billion.
Bangladesh’s Daily Star newspaper reported on Tuesday that the country wanted $4.5 billion from the IMF.
The country’s $416 billion economy has been one of the fastest-growing in the world for years, but rising energy and food prices because of the Russia-Ukraine war has inflated its import bill and the current account deficit.
Bangladesh’s economic mainstay is its export-oriented garments industry, which could suffer if sales fall in its main markets in Europe and the United States because of a slowdown in the global economy. After garments, remittances are the second highest source of foreign currency for Bangladesh.
The South Asian country’s foreign exchange reserves fell to $39.67 billion as of July 20 – sufficient for 5.3 months worth of imports – from $45.5 billion a year earlier.
Its July to May current account deficit was $17.2 billion, compared with a deficit of $2.78 billion in the year-earlier period, as its trade deficit widened and remittances fell.
Sri Lanka and Pakistan are the other two South Asian countries to have sought IMF support this year.