The depleting foreign-exchange reserve in Bangladesh may get a bit relief by this December as the Asian Development Bank is likely to confirm $400-million budget support, officials said on Saturday.
"The Manila-based lender has assured us of providing policy-based credit. We're continuing discussion and hopeful of getting confirmation by the end of this year," said a senior official of the Economic Relations Division (ERD).
"The budget support will give a cushion against our foreign exchange reserve, which is now under pressure," he told the FE.
The central bank data showed the forex reserve came down to $21.06 billion (as per BPM6 method) at the end of September from that of $36.47 billion a year ago.
Meanwhile, remittance and export earnings of the country are also dwindling compared to month-on-month imports, predicting a further pressure on the forex reserve in the coming months.
The ERD official said the ADB earlier confirmed $400 million worth of budget support to Bangladesh in June, the last month of fiscal year (FY) 2022-23.
The ADB has now come forward with its budget support credit under the 'Promoting Climate-resilient Development Programme (Sub-programme 01)', he added.
"The ADB has already shared its terms and conditions with the Finance Division, which is working on the lending proposal.
After finalisation, we'll go for negotiations to get confirmation of the credit."
"Following the negotiations," the official said, "we will sign the loan deal by December of this FY2024."
In another development, Dhaka is working with the International Monetary Fund (IMF) to get the second tranche of its committed $4.5-billion financial support to the government.
The IMF approved the $4.5 billion loan to Bangladesh in January 2023 with some strings attached.
In February, the lender released $476.27 million as the first tranche of the loan and the country is expected to receive the second tranche by November.
However, the government has failed to comply with conditions like maintaining a minimum net foreign-exchange reserve of $24.46 billion until June 2023.
This stipulation has created uncertainty about getting the second tranche from the IMF, officials said.
Meanwhile, Dhaka is also trying to mobilise some budget support credit from other development partners, including the World Bank, the Asian Infrastructure Investment Bank and Japan, ERD officials said.
In FY2023, the government received budget support from all the above four major development partners.
kabirhumayan10@gmail.com
