New Delhi, April 21: Bangladesh has failed to get any breakthrough at the IMF-World Bank Spring meeting, held earlier this month, on the stalled IMF programme, and no assurance that the expected $3.2 billion in budget support from the World Bank, the ADB, the AIIB, and Japan can be mobilised within the government’s timeline, a local media report said.
At a time when tensions in the Strait of Hormuz are already unsettling global energy and freight markets, this ambiguity could not have come at a worse time, according to an article in Dhaka’s Business Standard newspaper. Yet the Bangladesh government’s post-meeting narrative has been one of calm continuity.
Officials insist the IMF programme is not off the table, and that external financing will materialise once routine discussions conclude in the coming months, the article stated. Bangladesh is facing a tight fiscal situation with a record Tk9.3 trillion budget built on an ambitious revenue target that keeps the deficit deceptively modest as a share of GDP.
The implicit message is that adjustment can wait – even as the global environment grows more hostile. That assumption is increasingly difficult to sustain amid rising oil prices due to the Middle East conflict, leading to a burgeoning import bill and expanding subsidy requirements. Disruptions to Saudi and Qatari urea shipments raise fertiliser costs and threaten agricultural cycles. War-risk premiums on Gulf shipping routes increase freight costs for an import-dependent manufacturing base.
Each additional dollar spent on fuel, fertiliser, and freight becomes a direct drawdown on already strained foreign exchange reserves, the article observed. Crucially, these pressures are not temporary. Even if the conflict were to de-escalate quickly, the lagged effects on prices, supply chains, and risk premiums are likely to persist for months.
This is a shock that compounds over time – and it is arriving just as Bangladesh’s policy credibility is beginning to fray, it stated. The deeper problem is that the pressure is no longer one-sided. Bangladesh today finds itself caught between a shock it cannot control and policies it has been slow to adjust.
The global environment is tightening from one end; policy inertia is tightening from the other. The result is a narrowing policy space – an economy squeezed from both directions. Under these circumstances, the stalled IMF programme matters far beyond its immediate financing value. Without an active IMF programme, Bangladesh also loses its credibility anchor, which will make it more difficult to get loans from other multilateral institutions.
IANS
