Bangladesh is going to fulfil the International Monetary Fund's condition on foreign exchange reserves in June on the back of record budget assistance from global creditors, the first time since the IMF approved its $4.7 billion loan programme more than a year ago.
The development comes after several bilateral and multilateral lenders approved $4.8 billion this month. Of the volume, budget support amounted to $2.76 billion and project loans stood at $2.04 billion. The budget support has already been added to the forex account of the Bangladesh Bank.
The IMF unveiled the loan scheme in January 2023 as the country was compelled to turn to external creditors owing to the unprecedented balance of payments crisis amid a sharp decline in the forex reserves because of higher outflows against inflows.
Maintaining a certain level of net international reserves (NIR) has been a major condition attached with the loan. However, the government could not meet the target set for June, September and December last year and March this year. Still, Bangladesh has received three instalments under the programme.
The country was given a revised target of keeping an NIR of $17.78 billion in December. The actual NIR stood at $16.73 billion.
In order to secure the fourth instalment, the country would have to keep an NIR of $14.79 billion on June 30. However, thanks to the disbursement of a record amount of budget support, the country is going to hit the goal.
"Bangladesh has fulfilled the condition on the NIR," BB Spokesperson Md Mezbaul Haque told The Daily Star, without disclosing the exact figure.
Another central banker said the NIR would be above $15 billion. "The overall reserves have increased riding on the budget support and the incremental rise in inward remittance earnings ahead of Eid-ul-Azha."
In the first three weeks of June, remittance earnings were around $2 billion. It was $2.5 billion in the previous month.
Among the budget support, the IMF lent $1.15 billion, the World Bank approved $500 million, the Asian Development Bank extended $290 million, South Korea provided $100 million, and France gave $107 million.
The Asian Infrastructure Investment Bank is scheduled to approve a $400 million loan today. The disbursement would be made on the day as well, according to a finance ministry official.
BB officials said the gross forex reserves amounted to $21.99 billion on Thursday while the NIR was $15.5 billion.
The NIR is defined as reserves assets minus forex liabilities. Currently, the central bank releases data on the reserves as per its traditional accounting method as well as in line with the balance of payments and investment position manual (BPM6) of the IMF.
Usually, the NIR is $5 billion to $6 billion lower than the amount reported in line with the manual.
The fund from the ADB is going to be added to the central bank's reserves. It will also have to make some repayments. Afterwards, the NIR would be above $15 billion.
This month, the WB approved loans totalling $1.5 billion. South Korea gave its nod for $814 million in credit support.
Bilateral and multilateral lenders committed $7.93 billion in loans and support in the first 11 months of 2023-24, up 33 percent year-on-year, financial ministry figures showed.
They disbursed $7.02 billion in July-May against $6.98 billion in the similar period in the previous financial year. Bangladesh repaid $3.07 billion in loans, and it was $2.46 billion a year earlier.