The International Monetary Fund (IMF) has reaffirmed its commitment to Bangladesh following the recent resignation and departure of Prime Minister Sheikh Hasina. The political upheaval, triggered by student-led protests that resulted in hundreds of deaths, led to the dissolution of parliament by the country’s president, paving the way for new elections.
The IMF, which had approved a $4.7 billion loan program with Bangladesh in January 2023, expressed deep sadness over the violence and loss of life. An IMF spokesperson emphasized the institution’s ongoing support for Bangladesh’s economic stability and inclusive growth, stating, “We remain fully committed to Bangladesh and its people.”
Multilateral lending, including support from the IMF, World Bank, and the Asian Development Bank, constitutes approximately a quarter of Bangladesh’s GDP, underscoring the critical role of these institutions in the country’s economy. The World Bank, with total commitments of $2.85 billion for the fiscal year ending June 30, is also assessing the impact of the political crisis on its programs but remains dedicated to Bangladesh’s development.
Despite the political unrest, Bangladesh’s short-term external debt is limited to 5% of GDP, and the nation does not hold foreign currency bonds, which has mitigated market reactions. However, economic challenges persist, including high inflation around 10%, dwindling dollar reserves, and a significant youth unemployment crisis.
The actions of the government and military in the coming days will be closely scrutinized by multilateral lenders. A military coup, in particular, could jeopardize future sovereign debt from these institutions, according to experts.