The International Monetary Fund (IMF) has reaffirmed its commitment to Bangladesh following a period of intense political upheaval. The statement comes in the wake of significant unrest that led to the resignation of Prime Minister Sheikh Hasina and the dissolution of parliament by the president.

The IMF, which had previously approved a $4.7 billion loan program with Bangladesh in January 2023, expressed its support for the country’s efforts to maintain economic stability and foster inclusive growth despite the recent challenges.

The IMF’s renewed assurance highlights the critical role that international financial institutions play in Bangladesh’s economy. Long-term lending from multilaterals, including the IMF, World Bank, and Asia Development Bank, constitutes approximately 25% of Bangladesh’s GDP, underscoring the importance of continued international backing for the country’s economic health.

The IMF spokesperson noted their concern over the loss of lives and injuries resulting from the recent protests and reiterated their support for the country’s economic stability.

The ongoing political crisis has significant implications for Bangladesh’s economic landscape. The protests, driven by high youth unemployment, stagnant economic conditions, and rising inflation, have exacerbated the country’s economic challenges and investors confidence.

With inflation at around 10% and foreign currency reserves dwindling to a mere three months of import cover, the stability of Bangladesh’s financial and investment climate is under scrutiny. The IMF’s commitment is crucial as it may influence the stance of other multilateral lenders like the World Bank, which is currently assessing the impact of the unrest on its financial commitments to Bangladesh.

The broader impact of this situation on Bangladesh’s investment climate cannot be understated. Political instability can deter potential investors and disrupt ongoing economic and trade reforms. However, the IMF’s assurance and continued support could help stabilize the situation, fostering confidence among international investors.

A robust international backing could play a pivotal role in facilitating economic recovery and maintaining investor confidence during this volatile period.

Source: The Daily Star