The Executive Board of the International Monetary Fund (IMF) on Friday approved a total of $732 million emergency assistance for Bangladesh to help finance its health, social protection and macroeconomic stabilization measures arising from the Novel Coronavirus (COVID-19) outbreak.

To address the urgent balance-of-payments and fiscal needs, the IMF approved this emergency assistance for Bangladesh under the Rapid Credit Facility and the Rapid Financing Instrument.

The financing approved a disbursement of SDR 177.77 million (about US$ 244 million or 16.67 percent of quota) under the Rapid Credit Facility (RCF), and a purchase of SDR 355.53 million (about US$ 488 million or 33.33 percent of quota) under the Rapid Financing Instrument (RFI), said an IMF press release.

The release said this will help finance the health, social protection and macroeconomic stabilization measures, meet the urgent balance-of-payments and fiscal needs arising from the COVID-19 outbreak, and catalyze additional support from the international community.

The authorities have started implementing several measures to mitigate the impact of the pandemic and preserve the country’s macroeconomic prospects.

In addition to increasing health expenditures, the release said the government’s immediate response has focused on expanding food distribution and cash transfer programs to vulnerable populations, ensuring the payment of wages in export-oriented industries, and facilitating the provision of working capital to businesses and farmers.

The authorities remain committed to promoting strong and inclusive growth while preserving macroeconomic stability. Key policy challenges include tax revenue mobilization, addressing the non-performing loans in the banking sector, and improving infrastructure and governance to enhance the business environment and attract foreign direct investment.

The IMF continues to monitor Bangladesh’s situation closely and stands ready to provide further advice and support if needed. The authorities have also committed to putting in place targeted transparency and accountability measures to ensure the appropriate use of emergency financing.

Following the Executive Board’s discussion on Bangladesh, Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued the following statement:

“The outbreak of COVID-19 is affecting the two main sources of Bangladesh’s external earnings, exports of ready-made garments and remittances. Together with the measures to contain the spread of the virus in the country, the outbreak is expected to result in a significant slowdown of economic growth and the emergence of fiscal and balance of payments needs.”

She also said the IMF’s emergency financial assistance will help cover the financing gap and support the authorities’ effort to contain the adverse impact of the outbreak and catalyze additional support from the international community.

“The authorities have responded quickly to the COVID-19 outbreak with a comprehensive set of measures aimed at containing the spread of the pandemic, providing immediate relief to the most vulnerable households and affected businesses, and preserving the country’s macroeconomic prospects.” she added.

Sayeh said the Bangladesh Bank took appropriate steps to ease liquidity conditions and allow the financial sector to support the economy.