DHAKA: Bangladesh, one of the fastest growing economies, has joined others in the South Asian region to seek a loan from the International Monetary Fund, a move experts say is aimed at creating a buffer in its reserves to prevent a crisis situation faced by other regional countries.
Bangladesh’s $416 billion economy has been one of the fastest growing in the world for years, but globally rising food and fuel prices have put a strain on its balance of payments and the current account deficit.
Bangladeshi Finance Minister A. H. M. Mustafa Kamal told the media on Wednesday that the country had applied to the IMF to start a formal negotiation to obtain loans for balance of payments and budget assistance, even though it was “no way in trouble” in its macroeconomic situation.
Kamal has not specified the amount Bangladesh was seeking and said that “how much loan will be available will depend on them.” The IMF, which on the same day announced it was ready to engage with Bangladeshi authorities on loan program design, also did not comment on the potential amount, saying it “will be part of the program design discussions.”
Bangladesh’s request to the IMF comes as nearby Sri Lanka and Pakistan have sought IMF help.
Sri Lanka is in its worst economic crisis in memory and in May officially defaulted on its debt, while Pakistan’s reserves have fallen to as low at $8.2 billion — enough only to cover about six weeks of imports. Both have also been hit by political turmoil.
While Sri Lanka and Pakistan have applied for a bailout, Bangladesh said its situation is different.
“Why bailout? Is the country in so deep a crisis that we have to take the bailout?” Principal Secretary to the Prime Minister Ahmad Kaikaus told reporters. “We have import expenditure for more than five months in our reserve.”
But the world’s second-largest garment exporter is witnessing the destabilizing impacts of the COVID-19 pandemic and Russia’s invasion of Ukraine, which are taking a toll on financial markets and foreign reserves in the South Asian region, where inflation is sharply increasing.
Experts see the government’s move to approach to the IMF as an attempt to act proactively to prevent the situation faced by other regional countries.
“The combined effects have been devastating for the whole global economy, and Bangladesh is no exception,” Dr. Ahsan H. Mansur, executive director of the Policy Research Institute in Dhaka, told Arab News.
“The government is working in consultation with the IMF to get a program. If the measures are taken in the context of IMF program, that should help and stabilize the market.”
While Bangladesh’s inflation in June stood at 7.56 percent, Zahid Husain, former lead economist at the World Bank in Dhaka, said it is rising at a nine-year high.
“The economy is under a bit of stress,” he told Arab News. “There is pressure on the reserves because of increasing external imbalances. And as a result, we are seeing some instability in foreign exchange markets, and the official foreign currency reserves have been declining.”
Bangladesh’s foreign exchange reserves are nearly $40 billion, compared with $45.5 billion a year earlier, according to central bank data from last week.
“The main reason (to seek a loan from the IMF) is to create some buffer in the foreign exchange reserves because the IMF support comes in the form of balance of payments support and maybe some budget support as well,” he said.
“Bangladesh will need to do some reforms in order to get this support, but I think the initiative to seek IMF assistance is very timely. It takes a while to get the process completed, so before we run into some severe reserve problem, if we have an IMF program, that will give a lot of confidence to the participants in the financial markets and the foreign exchange market.”
TASHKENT: Russian Foreign Minister Sergei Lavrov said on Friday that Moscow would soon propose a time for a call with US Secretary of State Antony Blinken, in which Blinken has said he wants to discuss an exchange of prisoners held in Russian and US jails. Blinken said on Wednesday that Washington had made a “substantial offer” to obtain the release of US basketball star Brittney Griner and former Marine Paul Whelan, both detained in Russia. A source said that Washington was willing to exchange convicted arms trafficker Viktor Bout, jailed in the United States, as part of such a deal. Blinken and Biden have not spoken since Russia invaded Ukraine on Feb. 24. Families of the US detainees have been increasing pressure on President Joe Biden, most recently in the case of two-time Olympic gold medallist Griner, who was arrested on drugs charges at a Moscow airport on Feb. 17. Lavrov told a news conference that talks on prisoner exchanges had been taking place since a summit in Geneva last year where presidents Vladimir Putin and Joe Biden had agreed to nominate officials to look into the issue. He said his ministry was not involved in that, but “nevertheless, I will listen to what he (Blinken) has to say.” Speaking during a trip to Uzbekistan, Lavrov said he would talk to Blinken when he returned to his office. “It’s clear this is unlikely to work out today. But in the coming days we will offer our American colleagues a convenient date,” he said.
KYIV: Dozens of Ukrainian prisoners of war appear to have been killed in an missile strike on Friday, with Moscow and Kyiv accusing each other of carrying out the attack. The incident overshadowed UN-backed efforts to restart grain shipments from Ukraine and ease a looming global hunger crisis stemming from the war, now in its sixth month. Russia’s defense ministry said 40 prisoners were killed and 75 wounded in the attack on the prison in the frontline town of Olenivka, in a part of Donetsk province held by separatists. It accused Kyiv of targeting it with US-made HIMARS rockets, Russian news agencies reported. Ukraine’s armed forces denied carrying out strike and blamed it on Russian forces, saying Russian artillery had targeted the prison. “In this way, the Russian occupiers pursued their criminal goals — to accuse Ukraine of committing ‘war crimes’, as well as to hide the torture of prisoners and executions,” the general staff of the Ukrainian Armed Forces said. The Russian defense ministry said the prison housed Ukrainian prisoners of war and that eight prison staff were also wounded. Russian-backed separatist leader Denis Pushilin was quoted as saying there were no foreigners among 193 people held there. Video released by a Russian war correspondent showed Russian-backed military personnel sifting through the burned-out remains of what he said was the prison. The smashed roof of the building was hanging down and the charred remains of bodies could be seen. Separately Ukraine said at least five people had been killed and seven wounded in a Russian missile strike on the southeastern city of Mykolaiv, a river port just off the Black Sea, as Russia fired across frontlines in eastern and southern Ukraine. A missile struck near a public transport stop, regional governor Vitaly Kim said on Telegram. Russia, which denies targeting civilians, did not immediately comment on the situation and Reuters could not verify the battlefield reports.
MOSCOW: Eight people died in a blaze in a 15-story building in Moscow overnight, after a fire alarm malfunctioned, officials said Friday. The fire erupted in the building in a southeastern district, an agency investigating criminal acts said, adding that four people were hospitalized. Emergency services said the blaze broke out on the ground floor of the building, adding that the flames were doused soon after midnight and that more than 200 people were evacuated. A senior emergency official told TASS news agency that a fire alarm in a hostel malfunctioned and that the people inside were trapped as all the windows had metal bars. A criminal negligence case has been opened. Russian buildings are regularly struck by fires and gas leaks blamed on poor maintenance, infrastructure or negligence.