Bangladesh: Second Reviews Under the Extended Credit Facility Arrangement and the Arrangement Under the Extended Fund Facility, and Requests for Rephasing of Access, a Waiver of Nonobservance of a Performance Criterion, and Modifications of a Performance Criterion, and Second Review Under the Resilience and Sustainability Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Bangladesh

BANGLADESH IMFCountryReportNo.24/186 June2024 SECONDREVIEWSUNDERTHEEXTENDEDCREDITFACILITYARRANGEMENTANDTHEARRANGEMENTUNDERTHEEXTENDEDFUNDFACILITY,ANDREQUESTSFORREPHASINGOFACCESS,AWAIVEROFNONOBSERVANCEOFAPERFORMANCECRITERION,ANDMODIFICATIONSOFAPERFORMANCECRITERION,ANDSECONDREVIEWUNDERTHERESILIENCEANDSUSTAINABILITYFACILITYARRANGEMENT—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORBANGLADESH InthecontextoftheSecondReviewundertheExtendedCreditFacilityarrangementandtheArrangementundertheExtendedFundFacility,andRequestsforRephasingofAccess,aWaiverofNonobservanceofaPerformanceCriterion,andModificationsofaPerformanceCriterion,andSecondReviewundertheResilienceandSustainabilityFacilityArrangement,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleaseincludingastatementbytheChairoftheExecutiveBoard. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonJune24,2024,followingdiscussionsthatendedonMay8,2024,withtheofficialsofBangladeshoneconomicdevelopmentsandpoliciesunderpinningtheIMFarrangementundertheExtendedCreditFacility.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonJune7,2024. ADebtSustainabilityAnalysispreparedbythestaffsoftheIMFandtheWorldBank. AWorldBankAssessmentLetterfortheResilienceandSustainabilityFacility. AStatementbytheExecutiveDirectorforBangladesh. TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.org InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/234 IMFExecutiveBoardConcludestheSecondReviewundertheExtendedCreditFacility,ExtendedFundFacility,ResilienceandSustainabilityFacilityforBangladesh FORIMMEDIATERELEASE TheIMFExecutiveBoardconcludedthesecondreviewunderofBangladesh’sarrangementsundertheExtendedCreditFacility(ECF)andExtendedFundFacility(EFF),providingthecountrywithimmediateaccesstoaboutUS$928million. TheIMFExecutiveBoardalsoconcludedthesecondreviewofBangladesh’sarrangementundertheResilienceandSustainabilityFacility(RSF),makingavailableaboutUS$220milliontosupportBangladesh’sambitiousclimatechangeagenda.1 Bangladesh’shomegrowncomprehensiveprogramofeconomicreformsisbeingsupportedbytheIMFtohelprestoreeconomicstabilityandprotectthevulnerable,whilelayingthefoundationsforaninclusiveandenvironmentallysustainablegrowth. Washington,DC–June24,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)completedthesecondreviewundertheExtendedCreditFacility(ECF),ExtendedFundFacility(EFF),andResilienceandSustainabilityFacility(RSF)arrangementsforBangladesh,allowingtheauthoritiestowithdrawtheequivalenttoSDR704.70million(aboutUS$928million)undertheECF/EFF,andSDR166.68million(aboutUS$220million)undertheRSF.ThisbringstotaldisbursementsundertheECF/EFFsofartoSDR1,409.40million(aboutUS$1,856million)andundertheRSFtoSDR333.35million(aboutUS$439million).2Further,theExecutiveBoardgrantedawaiverofnonobservanceofaperformancecriterionfortheflooronnetinternationalreservesonthebasisofcorrectiveactions. Bangladesh’seconomycontinuestofacemultiplechallenges.Stubbornlyhighinternationalcommoditypricesandcontinuedglobalfinancialtighteninghaveamplifiedmacroeconomicvulnerabilities.Althoughthecurrentaccountremainscompressed,asuddenreversalofthefinancialaccounthaskeptforeignexchange(FX)reservesandtheTakaunderpressure.Inresponsetothesepressures,theauthoritieshaverecentlyundertakenboldexchangeratereforms. RealGDPgrowthslowedto4.8percentinFY24H1,whileheadlineinflationreachedadecadehighof9.7percentyear-on-yearinApril2024.Lookingahead,realGDPgrowthisprojectedat 5.4percentinFY24,owingtotheongoingimportcompressionandpolicytightening,andwill 1RefertothelatestIMFCountryFocusreportasanillustrationofthenumerousvulnerabilitiestoclimatechangethatBangladeshfaces,alongwiththeinnovativestrategiesitemploystoaddressthem. 2SDRfiguresforthedisbursedareconvertedatthemarketrateofU.S.dollarperSDRonthedayoftheBoardapproval. 2 pickupto6.6percentinFY25asimportsreboundandFXpressuresease.Inflationisprojectedtoremainelevatedatapproximately9.4percentinFY24butisanticipatedtodeclinetoaround7.2percentinFY25,onthebackofthecontinuedtighterpolicymixandprojectedlowerglobalfoodandcommodityprices.Followingtheexchangeraterealignment,grossinternationalreserves(GIR)areprojectedtograduallyincrease.Nonetheless,uncertaintiesaroundtheoutlookremainhighandrisksaretiltedtothedownside. Bangladesh’sarrangementsundertheECF/EFFandRSFwereapprovedbytheExecutiveBoardonJanuary30,2023(seePressReleaseNo.23/25)inanamountequivalenttoSDR2.5billion(154.3percentofquotaoraboutUS$3.3billion)undertheECF/EFFandSDR1billion(93.8percentofquotaoraboutUS$1.4billion)undertheRSF.TheECF/EFFarrangementhashelpedtopreventdisruptiveadjustmentstorestorema