Bangladesh seeks IMF support to head off financial crisis

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Bangladesh has sought financial assistance from the International Monetary Fund to deal with the financial shock caused by volatile energy prices following the Russian invasion of Ukraine.

Important facts

• Economists say the Bangladeshi taka has fallen by nearly 20% against the US dollar in the past three months.

• Bangladesh's foreign exchange reserves fell to $39.67 billion as of July 20 from $45.5 billion a year ago.

• Remittances from overseas Bangladeshis fell 5% to $1.84 billion in June.

• The depreciation of the local currency has further weakened the country's financial position, with the current account deficit reaching $17 billion.

• Sri Lanka is facing its worst economic crisis in South Asia in seven decades, while Pakistan's foreign exchange reserves are depleting rapidly.

Reason of precarious financial situation

• Bangladesh's precarious financial situation has been compounded by unprecedented flooding in the northeast, inundating homes of more than seven million people and causing nearly $10 billion in damage.

• The economies of the region have been severely affected by the Ukraine War, which has raised the cost of fuel and other essential imports.

Government's measures

• The government has implemented "austerity measures" in addition to power rationing, including import restrictions and cutting power spending.

• Diesel power plants in the country, which have a generating capacity of 1,500 MW, have been taken off the grid, while some of the gas-fired plants are also dormant.

• Bangladesh Bank announced a policy to preserve the dollar by discouraging the import of some items like luxury items, fruits, non-cereal foods and packaged and processed foods.

About Bangladesh

• Official Name - Gana Prajatantri Bangladesh (People’s Republic of Bangladesh)

• Prime Minister - Sheikh Hasina

• Capital - Dhaka

• President - Abdul Hamid

• Official Language    - Bengali (Bangla)

• Official Religion - Islam

• Currency - Taka