Bangladesh to Receive $3.5 Billion in Loans as Central Bank Introduces Market-Based Exchange Rate
Bangladesh Bank Governor Dr. Ahsan H. Mansur on Wednesday announced that the country will receive $3.5 billion in loans next month from international lenders, including the World Bank, Asian Development Bank (ADB), and the International Monetary Fund (IMF). Of this total, the IMF is expected to disburse $1.3 billion.
The announcement came during a virtual press conference held at the central bank headquarters. During the briefing, the governor also declared the immediate implementation of a market-based exchange rate to meet IMF conditions.
He noted that the rate is expected to remain close to the current level due to adequate dollar liquidity. Banks were briefed about the new exchange rate mechanism earlier in the day.
To prevent volatility, the central bank will continue to intervene in the case of large foreign transactions. A band exchange rate system has also been introduced, though the specific range will not be made public.
This shift follows a visit by an IMF staff mission, led by Chris Papageorgiou, which conducted the third and fourth reviews of Bangladesh’s reform programs under the Extended Fund Facility (EFF), Extended Credit Facility (ECF), and the Resilience and Sustainability Facility (RSF) from April 6–17.
The IMF has been pressing for the adoption of a fully flexible exchange rate, urging Bangladesh to move beyond incremental adjustments and to eliminate multiple exchange rate windows. The central bank, however, remained cautious, citing risks of inflation and political resistance.
To date, Bangladesh has received three installments totaling $2.3 billion from the IMF’s $4.7 billion loan package.
A band exchange rate allows a currency to fluctuate within a predetermined range set by the central bank. If the exchange rate moves beyond this range, the central bank intervenes to stabilize it. This system is also referred to as a “managed float” and has been used in countries like China and Argentina, balancing currency flexibility with controlled stability.
