IMF board clears first review of Bangladesh’s $4.7 billion bailout

(Reuters) -The International Monetary Fund said its executive board cleared the first review of Bangladesh’s $4.7 billion bailout on Tuesday, providing $689.8 million in funding to Dhaka as it battles high inflation ahead of national elections in January.

The IMF provided Bangladesh with immediate access to about $468.3 million and also made available $221.5 million in support of the country’s climate change agenda.

Sharply rising living costs have sparked violent protests in recent months in Bangladesh as Prime Minister Sheikh Hasina’s government struggles to pay for costly energy imports due to shrinking dollar reserves and a weakening Taka currency.

The IMF said Bangladesh’s monetary policy should be tightened to restore near-term macroeconomic stability, supported by neutral fiscal policy and greater exchange rate flexibility.

“Bangladesh’s economy is navigating multi-faceted economic challenges. Despite a difficult external environment, program performance has been broadly on track…” Antoinette Sayeh, the deputy managing director of IMF, said.

“Near-term policies should continue to focus on containing inflation,” Sayeh added.

The IMF projected real GDP growth at 6% in 2024 for Bangladesh and expected inflation to moderate to 7.25% year over year by the end of 2024.

Bangladesh received an immediate disbursement of about $476 million when the IMF approved the loans in January.

(Reporting by Akanksha Khushi; Writing by Shivam Patel; editing by Jonathan Oatis, Lisa Shumaker and Lincoln Feast.)