Bangladesh seeks $5 billion in emergency support to boost forex reserves

Dhaka: Bangladesh is appealing urgently for $5 billion in financial aid from major international lenders to stabilise its dwindling foreign exchange reserves, the head of the interim government Muhammad Yunus said on Wednesday.

The Nobel Peace laureate's administration was sworn in last month with the aim of holding elections after the ousting of prime minister Sheikh Hasina following deadly protests.

“We are also negotiating for lower interest rates and extended loan tenures from Russia and China,” Yunus said in a televised address to the South Asian nation, as the government grapples with mounting foreign payments.

The $5 billion request includes $3 billion from the International Monetary Fund (IMF), $1 billion from the World Bank, and an additional $1 billion from the Japan International Cooperation Agency (JICA), as the government seeks to navigate the economic fallout of rising global prices due to the Russia-Ukraine conflict.

The country's $450-billion economy has been struggling since the war sharply increased the cost of fuel and food imports, forcing it to seek financial support from the IMF last year in the form of a $4.7-billion bailout.

Bangladesh is under immense pressure to clear overseas purchase bills, particularly for essential imports. In response, the finance ministry has entered discussions with Russia to settle both advance payments and outstanding balances related to the Rooppur nuclear power plant project.

The interim administration's primary goal is to guide the nation through a peaceful transition, culminating in new elections. However, the economic turmoil, exacerbated by global pressures, has put additional strain on the nation’s financial stability.

Yunus also announced plans to establish six new commissions aimed at reforming critical sectors, including the constitution, the electoral system, the judiciary, the police, the Anti-Corruption Commission and public administration.

These commissions will investigate specific areas and offer recommendations for reforms.

"We plan to expand this approach by forming additional commissions to tackle other important matters," Yunus said.

The six commissions are expected to be fully operational by October 1, and to complete their work within three months.

In the final phase, a detailed outline of the proposed reforms will be developed after a consultation period of three to seven days. This period will involve student groups, civil society organizations, political party representatives, and government officials, ensuring that a wide range of perspectives are incorporated into the reform process, he said.

“This phase will also outline the implementation strategy for these reforms.”