LONDON: The International Monetary Fund (IMF) said it remained “fully committed to Bangladesh and its people” after protests ousted the prime minister.
Bangladesh’s president dissolved parliament on Tuesday, clearing the way for new elections a day after Prime Minister Sheikh Hasina resigned and fled the country following student-led protests that left hundreds dead.
Long-term lending from multilateral including the IMF, World Bank and the Asia Development Bank amounts to roughly a quarter of Bangladesh’s GDP, according to emerging market experts Tellimer, making their continued backing key to the country’s economy.
The IMF, which approved a $4.7 billion loan programme with the country in January 2023, said it was following developments and “deeply saddened by loss of lives and injuries.”
“We remain fully committed to Bangladesh and its people and support efforts to ensure economic stability and deliver inclusive growth,” an IMF spokesperson said in an emailed statement.
On Monday, the World Bank, which had total commitments of $2.85 billion in the year to June 30, said it was still assessing the impact of the events on its lending, but remained committed to Bangladesh’s development.
Bangladesh does not have any foreign currency bonds, and its short-term external debt is just 5% of GDP, limiting market reaction to the political turmoil.
But a stagnant economy contributed to the protests; nearly 32 million young people in the nation of 170 million are out of work or education in a population. Inflation hovers around 10% per year and dollar reserves have shrunk to just three months of import cover.
Multilateral lenders will be closely watching the next steps taken by the government and the military.
“A military coup, in legal terms, would put at risk fresh external sovereign debt from multilaterals,” Hasnain Malik of Tellimer said.
