The IMF in a press release said that the assistance has been approved for Bangladesh to meet its urgent Balance of payment and fiscal needs as Corona pandemic has led to sharp decline in its exports and income from remittances.
The assistance is provided under the Rapid Credit Facility and Rapid Financing Instrument provisions of the IMF. The money will help Bangladesh to meet its health, social protection and macro-stabilization measures.
The acting Chair of IMF Executive Board Antoinette Sayeh in a statement said that the assistance will help the government of Bangladesh to cover the financing gap and support its efforts to contain the adverse impact of the Corona outbreak in the country.
In response to the severe economic slow down due to Corona pandemic, the government of Bangladesh has undertaken food distribution and cash transfer programmes to vulnerable sections as well as ensuring payment of wages in Ready Made Garment (RMG) sector and provision of working capital to business and farmers.
The IMF said that mobilization of tax revenue, addressing the issue of Non-Performing Assets (NPAs) of the banks, infrastructure and governance remain key challenges for Bangladesh to enhance business environment and attract FDI.
This is the largest amount of loan assistance for Bangladesh to deal with the Covid-19 fallout. Earlier ADB provided 500 million assistance to Bangladesh to deal with the Corona pandemic.
The Ready Made Garments (RMG) sector contributes more than 80 percent to the total export earning of Bangladesh employing more than 4 million people. Foreign remittance is the second highest Foreign Exchange earner for Bangladesh. In Financial year 2019, Bangladesh received remittances of dollar 18.42 billion dollars.