Bangladesh economic crisis: IMF withholds $1.3 billion in 4th and 5th instalments of funding for not fulfilling conditions, delegation leaves country without confirming release

Bangladesh is lagging behind in fulfilling four essential requirements needed to obtain $1.3B of the fourth and fifth instalments of an International Monetary Fund (IMF) loan worth USD 4.7 billion. Weak revenue growth, a non-market exchange rate, inadequate subsidy reduction and a lack of anticipated advancements in the banking industry are among the areas of concern. After a two-week evaluation mission, the visiting IMF delegation summarised these issues in a briefing on 17th April.

The IMF stated that talks are still continuing, but did not render a final decision about the disbursement of the next tranches. The money could be released by the end of June if the progress is adequate. Chris Papageorgiou, Head of the Development Macroeconomics Section at the IMF’s Research Department, and nine other delegation members attended the briefing, which was hosted at the Bangladesh Bank. The IMF mission met with several government agencies, including Finance Adviser Salehuddin Ahmed, from 6th to 17th April prior to the briefing.

The package includes the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF). According to Papageorgiou, officials want to get a staff-level agreement, maybe at the IMF-World Bank Spring Meetings in Washington in scheduled from 21st-26th April.

Papageorgiou noted that the uncertainty in the world is posing a number of problems for Bangladesh’s economy. Growth in the gross domestic product (GDP) fell to 3.3% in the first half of the current fiscal year from 5.1% at a similar time last year. He blamed tight monetary policy, investment ambiguity and political upheaval for the recession. Inflation has decreased from a ten-year high of 11.7% to 9.4%, however, it is still far higher than the Bangladesh Bank’s desired range of 5.3-6%.

The nation’s foreign currency market has been volatile for over three years. Nonetheless, there have been indications of stability in recent months, primarily as a result of a rise in US dollar inflows that have narrowed the difference between official and black market rates. The exchange rate system is still only partially regulated in spite of this progress.

$476.2 million was paid out in February 2023, $681 million in December 2023, and $1.15 billion in June 2024 as the third tranche to Bangladesh. This indicates that the IMF has loaned Bangladesh a total of USD 2.31 billion. The IMF loan is regarded by economists as crucial to the nation’s economic stability. They claim that if the IMF does not make the loan available, other people will be deterred as well, and international financial institutions may lower Bangladesh’s credit rating.

It is important to note that Bangladesh and Pakistan, which were once part of India, have increasingly relied on financial assistance from other nations and international monetary organizations such as the IMF for their survival. The decline of these countries has been closely linked to their anti-India diplomatic stance, extreme ideologies and a greater emphasis on radical propaganda rather than fostering a developmental and progressive environment within their borders.

The stampedes in Pakistan over flour, combined with gas shortages and electricity outages, alongside rising inflation and dwindling reserves, have presented a concerning picture for the global community. The severity of the situation forced the government to implement spending cuts. Similarly, Bangladesh is becoming more radical under the leadership of Muhammad Yunus, while also experiencing a significant financial decline and inflation.

Currently, the two nations notorious for extremism, terrorism, jihad and the oppression of their minorities, particularly Hindus, have no choice but to turn to the IMF as their source of financial support for survival. Pakistan was placed on the grey list until 2022 due to its insufficient progress in adhering to United Nations Security Council Resolutions. In summary, the nation has become a center for terrorism and money laundering.

Now, Bangladesh appears to be following a similar trajectory. The prevalence of anti-Hindu hatred and jihadi propaganda takes precedence over any initiatives intended to improve the lives of their people. As a result, they are left with no choice but to solicit funds from the IMF. However, it seems that the nations are not gaining any insights, as reflected in the actions of their leaders like Army Chief Asim Munir and Muhammad Yunus.

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