Over $1b in IMF, ADB loans added to forex reserves
Bangladesh's depleted foreign currency reserves have received a boost as $1.09 billion have been added to the central bank's account, said an official.
Of the sum, $689 million came from the International Monetary Fund (IMF) and $400 million from the Asian Development Bank (ADB).
The funds were credited to the central bank's reserves on Thursday, said BB Executive Director and Spokesperson Md Mezbaul Haque.
The boost came two days after the executive board of the IMF completed the first review of the $4.7 billion loan programme and the Article IV consultations and unlocked disbursements of $689 million in the second tranche.
The central bank received $447.8 million on February 2 in the first instalment after the country turned to the lender amid an unprecedented reversal in the financial account that has led to a sharp drop in the reserve level in two years.
The financial account, a part of the balance of payments, covers claims or liabilities to non-residents concerning financial assets and its components include foreign direct investment, medium and long-term loans, trade credit, net aid flows, portfolio investment and reserve assets.
The account turned negative for the first time in the last financial year, standing at $2.08 billion, against a surplus of $16.69 billion a year earlier, Bangladesh Bank data showed. The account is projected to return to positive territory in the ongoing financial year.
Amid higher import bills against moderate remittance and export receipts, the gross international reserves of Bangladesh slipped to $24.3 billion in 2022-23 from $36 billion in 2019-20, which could cover import bills for 3.4 months in FY23 compared to 6.1 months in FY20. It stood at $46.4 billion in 2020-21, the highest on record.
The depleted reserves have prompted the government to turn to global lenders to tackle macroeconomic pressures, stop the further fall of the local currency, and rein in consumer prices.
Before the IMF and the ADB released the funds, the reserves stood at $19.17 billion.
The forex reserves are expected to increase gradually in the near term and are projected to reach about four months of prospective imports in the medium term.
"However, uncertainties around the outlook remain high and risks are tilted to the downside," said the IMF last week.
The World Bank is considering a $500 million budget support in the current fiscal year under two programmes.