By TON Bangladesh

Bangladesh has wanted a $4.5 billion loan from the International Monetary Fund (IMF), joining South Asian neighbors Pakistan and Sri Lanka in seeking help to manage with escalating stress on their economies. Despite the fact, that the economy of Bangladesh seemingly is not in shambles.

On Wednesday, Bangladesh has asked to start talks on a loan from the International Monetary Fund (IMF) but will take it only if conditions are satisfactory, tallying its macroeconomic conditions are fine. Popularly recognized for its big garment-exporting industry, Bangladesh has pursued the funds for its balance of payment and budgetary needs, as well as for efforts to deal with climate change.

The country’s $416 billion economy has been one of the fastest-growing in the world for years, but mounting energy and food charges because of the Russia-Ukraine war have exaggerated its import bill and the existing account deficit. According to finance minister a letter was sent to the IMF seeking assistance, but it has not been not mentioned that how much financial help required.

The government of Bangladesh is waiting to see their circumstances. If the IMF conditions are in favor of the country and well-matched with our improvement policy, otherwise not. Seeking a loan from the IMF does not mean Bangladesh’s economy is in wrong shape.

Bangladesh had requested it to start talks on a new loan under the global creditor’s Elasticity and Sustainability Trust. Such funds are covered at 150 per cent of a country’s quota or, in Bangladesh’s case, a maximum of $1 billion. In this regard the central bank, the Bangladesh Bank, recently announced a policy to preserve dollars by discouraging imports of luxury goods, fruit, non-cereal foods, and canned and processed foods.

Bangladesh's July to May current account deficit was $17.2 billion, equated with a deficit of $2.78 billion in the year-earlier period, according to central bank data, as its trade deficit expanded and payments fell. In the first 11 months of the fiscal year that ended on June 30, imports jumped 39% but exports grew 34%.

In the first 11 months of the fiscal year that ended on June 30, imports jumped 39% but exports grew 34%.The central bank, the Bangladesh Bank, recently announced a policy to preserve dollars by discouraging imports of luxury goods, fruit, non-cereal foods, and canned and processed foods.

Its foreign-exchange reserves fell to $39.67 billion as of July 20 sufficient for imports for about 5.3 months from $45.5 billion a year earlier. Remittances from overseas Bangladeshis fell 5% in June to $1.84 billion, the central bank said, as many migrant workers lost their jobs because of the COVID-19 pandemic and many could not get home because of the travel disruption it caused.

As in South Asia, Sri Lanka is facing its worst economic crisis in seven decades while Pakistan foreign exchange reserves are reducing quickly. The region economies have been hit particularly hard by the Ukraine war also, which has raised the cost of fuel and other vital import.

The country wanted $4.5bn from the IMF. Bangladesh’s economic backbone is its export-oriented garments industry, which could suffer if sales fall in its key 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 $39.67bn as of July 20 sufficient for just over five months’ worth of imports from $45.5bn a year earlier.

The country seek long-term, low-interest rates from worldwide institutes in exchange for wider economic improvements like having flexible bank interest rates. As there's a need for a balance-of-payments support. Exports and remittances alone cannot handle that. Bangladesh need an extra dose of external funding.