DHAKA: The Inter­national Monetary Fund said on Wednesday it reached a preliminary agreement to provide Bangladesh with a $4.5 billion support package to help it cope with soaring energy and food prices.

Bangladesh in common with other Asian economies has been hit hard by the sharp rise in prices in the wake of Russia’s invasion of Ukraine, prompting angry street protests.

The South Asian nation of around 170 million people approached the IMF earlier this year for support.

An IMF delegation and Dhaka representatives “reached a staff-level agreement to support Bangladesh’s economic policies” with a total of $4.5bn under various facilities, the institution said in a statement, adding the deal was subject to IMF management approval.

Bangladesh plans to use the IMF loan to prop up its foreign exchange reserves, which have nosedived from $46bn to $34bn.

The Bangladeshi taka has depreciated some 25pc against the greenback in recent months, while according to official figures inflation has approached 10pc — but independent economists say the true figure is closer to 20pc.

Household budgets have been hit hard and the government has pledged to cap the price of several staple foods, including rice, to quell public discontent.

“Bangladesh’s robust economic recovery from the pandemic has been interrupted by Russia’s war in Ukraine, leading to a sharp widening of the current account deficit, rapid decline of foreign exchange reserves, rising inflation and slowing growth,” said IMF team leader Rahul Anand.

“Even as Bangladesh tackles these immediate challenges, addressing long-standing structural issues remains critical, including threats to macroeconomic stability from climate change,” he added.

Published in Dawn, November 10th, 2022