Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves a US$732 Million Disbursement to Bangladesh to Address the COVID-19 Pandemic







May 29, 2020











  • The IMF Executive Board approves the 60th request for emergency financial assistance to help its member countries address the challenges posed by COVID-19.
  • Bangladesh’s economy has been severely impacted by the COVID-19 pandemic with weaker domestic demand and a sharp decline in exports and remittances.
  • To address the urgent balance-of-payments and fiscal needs, the IMF approved US$ 732 million emergency assistance for Bangladesh under the Rapid Credit Facility and the Rapid Financing Instrument.
  • The government has scaled up health and social protection expenditures to mitigate the pandemic’s impact on the population and adopted several stimulus measures to preserve economic activity.

Washington, DC –
The Executive Board of the International Monetary Fund (IMF) today
approved a disbursement of SDR 177.77 million (about US$ 244 million or
16.67 percent of quota) under the

Rapid Credit Facility

(RCF), and a purchase of SDR 355.53 million (about US$ 488 million or
33.33 percent 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 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. Necessary policy responses to prevent a domestic pandemic,
including the shutdown of major cities, will inevitably affect economic
activities and slow growth.

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 IMF continues to monitor 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.

Following the Executive Board’s discussion on Bangladesh, Ms. Antoinette
Sayeh, Deputy Managing Director and Acting Chair, issued the following
statement:

“The outbreak of COVID-19 is severely affecting the two main sources of
Bangladesh’s external earnings, exports of ready-made garments and
remittances. Together with the measures to contain the spread of the virus
in the country, the outbreak is expected to result in a significant
slowdown of economic growth and the emergence of fiscal and balance of
payments needs. The IMF’s emergency financial assistance will help cover
the financing gap and support the authorities’ effort to contain the
adverse impact of the outbreak and catalyze additional support from the
international community.

“The authorities have responded quickly to the COVID-19 outbreak with a
comprehensive set of measures aimed at containing the spread of the
pandemic, providing immediate relief to the most vulnerable households and
affected businesses, and preserving the country’s macroeconomic prospects.
A temporary increase in the fiscal deficit is necessary, and it will be
important to ensure transparency and accountability in the use of all
emergency spending.

“The Bangladesh Bank took appropriate steps to ease liquidity conditions
and allow the financial sector to support the economy. Further easing could
be considered if the economic situation deteriorates and inflation remains
moderate. A gradual increase in exchange rate flexibility should be allowed
to adjust to the external shock while preserving foreign reserves.

“Once the crisis abates, the authorities are committed to re-focus on
addressing banking sector problems, including nonperforming loans and the
poor performance of the state-owned commercial banks. They are also
committed to ensuring fiscal discipline and debt sustainability by
broadening the tax base and strengthening tax administration and
compliance.”

More information:

IMF Lending Tracker (emergency financing request approved by the IMF
Executive Board)


https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker

IMF Executive Board calendar


https://www.imf.org/external/NP/SEC/bc/eng/index.aspx

IMF Factsheet: The IMF’s Rapid Credit Facility (RCF)


https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/08/Rapid-Credit-Facility

IMF Factsheet: The IMF’s Rapid Financing Instrument (RFI)


https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/19/55/Rapid-Financing-Instrument


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Pemba Sherpa

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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