Dhaka Seeks $6B from WB, ADB, Jica, and IMF to Stabilize Economy

In a bold move to address pressing economic challenges, Bangladesh has officially requested $6 billion in budget support from four major international lenders. This financial boost aims to settle the government’s mounting import bills, stabilize foreign exchange reserves, and rejuvenate the national economy.

Finance ministry officials are optimistic about securing these funds by December.

"We have requested $1 billion each from the World Bank, Asian Development Bank (ADB), and Japan International Cooperation Agency (JICA), and an additional $3 billion from the International Monetary Fund (IMF)," Finance Secretary Md Khairuzzaman Mozumder revealed to TBS on Thursday. "Official letters have been dispatched to these institutions, and we anticipate formal discussions will commence shortly."

The loan proposals follow extensive verbal negotiations with each lender. Officials expect formal talks to begin soon.

Bangladesh faces significant challenges due to a shortage of US dollars, complicating its ability to pay for essential imports such as electricity, fuel, and fertilizers. Additionally, there are outstanding bills owed to various government agencies.

To alleviate these issues, the government plans to utilize the anticipated $2 billion from the World Bank and ADB to settle overdue payments for critical imports. The previous administration, led by Sheikh Hasina, left behind a $2.2 billion arrears for these essential supplies.

Md Khairuzzaman Mozumder stated, "We are looking forward to starting formal discussions with these organizations soon."

The $1 billion loan from the World Bank is expected to be a key topic during WB Vice President Martin Raiser's visit to Dhaka later this month. Finance officials anticipate that the terms of this support may involve the removal of subsidies for electricity and gas, as well as the swift finalization of a new power sector master plan.

Additionally, Bangladesh has requested $3 billion from the IMF, supplementing the $4.7 billion already secured. During a recent virtual meeting with Finance Adviser Dr. Salehuddin Ahmed, the IMF verbally agreed to consider this new loan request.

Dr. Ahmed indicated that the IMF's managing director will address this proposal at the IMF's upcoming annual general meeting.

Since signing a $4.7 billion loan agreement with the IMF in January 2023, Bangladesh has received $2.3 billion in three instalments. With Pakistan recently securing a $7 billion bailout from the IMF, Bangladesh remains hopeful that the additional $3 billion from the IMF will provide a critical boost to its economic stability.