Bangladesh Bank unveils market-based exchange rate to meet IMF terms

This has unlocked $3.5 billion in foreign loans from multilateral lenders. Expected by June, this inflow will boost the country's strained budget as the fiscal draws to a close.

The IMF will release $1.3 billion, the fourth and fifth tranches of its $4.7-billion loan package, after the central bank agreed to adopt a market-based exchange rate, Bangladesh Bank governor Ahsan H Mansur announced.

For months, the IMF had withheld these funds, insisting on genuine exchange rate flexibility beyond superficial corridor adjustments and the elimination of multiple exchange rate windows.

Bangladesh has already received $2.31 billion across three tranches under the IMF's $4.7-billion loan programme, approved in early 2023.

Other global lenders, including the World Bank and the Asian Development Bank (ADB), are expected to provide an additional $1.4 billion in budget support next month.

In addition, the Economic Relations Division (ERD) is negotiating $800 million in funding from the Asian Infrastructure Investment Bank (AIIB) and Japan, which could be finalised before June, according to domestic media reports.

Loan agreements totalling $1.2 billion have already been signed with the World Bank, ADB, and the OPEC Fund.

Fibre2Fashion News Desk (DS)