Bangladesh seeks IMF loan but its economy isn’t bad. It came in as a shocking revelation to Pakistanis since they were taking it as a success story. However, the news broke like fire in Pakistan that Bangladesh is also seeking support from IMF. Yet, there is little consideration of facts in understanding the scenario.

Let’s go through the entire thread of events. Bangladesh has requested to begin negotiations with the International Monetary Fund (IMF) for a loan. Yet, it will only accept it under favorable terms, the country’s finance minister said. He also adds that macroeconomic conditions in Bangladesh are favorable.

The country’s $416 billion economy has been one of the world’s fastest-growing for years. The Russia-Ukraine war has bloated its import bill and current account imbalance. Minister A.H.M. Mustafa Kamal told reporters, “A letter requesting assistance from the IMF has been sent, but we have not specified the amount.”

“We are awaiting confirmation of their conditions. If the IMF terms are favorable to the nation and consistent with our development policy, we will proceed; otherwise, we will not. Bangladesh’s request for a loan from the IMF does not indicate its economy is in poor shape.”

This week, a senior IMF source told Reuters that Bangladesh had requested to begin loan negotiations under the Resilience and Sustainability Trust. These monies are limited to 150 percent of a country’s quota, or $1 billion in Bangladesh. Similarly, Daily Star states that Bangladesh had requested $4.5 billion from the IMF

Bangladesh’s economic pillar is its export-oriented garments industry. It could suffer if sales in Europe and the United States decline due to a worldwide economic recession. After garments, remittances are Bangladesh’s second-largest source of foreign cash.

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The South Asian nation’s foreign exchange reserves decreased to $39.67 billion on July 20 from $45.5 billion a year earlier, sufficient for just over five months of imports. Its current account deficit for July to May was $17.2bn, compared to a deficit of $2.78bn for the same period last year, as its trade deficit worsened and remittances declined.

Sri Lanka and Pakistan are the other two South Asian nations to seek IMF assistance this year.