Bangladesh’s foreign currency reserves received a significant lift as $1.09 billion has been added to the central bank’s account, confirmed an official source.
The International Monetary Fund (IMF) contributed $689 million, while the Asian Development Bank (ADB) added $400 million.
BB Executive Director and Spokesperson Md Mezbaul Haque announced the funds were credited to the central bank’s reserves on the14th of December, following the completion of the IMF’s first review of the $4.7 billion loan program.
This initiated the release of $689 million in the second tranche.
The country’s financial account witnessed an unprecedented downturn, resulting in a substantial drop in reserve levels over the past two years.
Data from Bangladesh Bank showed the financial account stood at a deficit of $2.08 billion in the last financial year, a stark contrast to the $16.69 billion surplus a year prior.
Due to increased import expenses coupled with moderate remittance and export earnings, Bangladesh’s gross international reserves plummeted to $24.3 billion in 2022-23 from $36 billion in 2019-20. This decline translated to covering import bills for only 3.4 months in FY23 compared to 6.1 months in FY20.
The depleted reserves prompted the government to seek aid from global lenders to address macroeconomic strains, stabilize the local currency, and control consumer prices. Before the release of funds by the IMF and the ADB, the reserves were at $19.17 billion.
Despite these positive prospects, the IMF emphasized significant uncertainties in the economic outlook with risks leaning towards the downside.