December 2, 2022

Bangladesh seeks precautionary cash to stave of balance of payments pain

Bangladesh is seeking $6.5 billion in loans, including $4.5 billion from the IMF and $1 billion each from the World Bank and the Asian Development Bank, the government announced this week. The request for capital is seen as a preemptive measure to shore up the country’s finances, Bloomberg reports.

Economic crises in fellow South Asian nations Pakistan and Sri Lanka have prompted jitters in Dhaka, whose foreign reserves have fallen to $39.48 billion from $45.7 billion last year, according to Bloomberg. Pakistan’s foreign reserves are estimated to be $9 billion, while Sri Lanka’s have fallen to zero.

Bangladesh’s July-to-May current account deficit has sextupled compared to the year earlier period, according to macroeconomic data firm Trading Economics, as the country faces inflation and a widening trade deficit due to the war in Ukraine, energy shocks and global supply chain failures. The IMF said it will consider Bangladesh’s request.

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