The funding comes as part of a new program aimed at helping vulnerable middle-income countries and island states.
The Executive Board of the International Monetary Fund (IMF) has approved a support program for Bangladesh worth $4.7 billion at current exchange rates, making the South Asian country the first to access its new Resilience and Sustainability Facility (RSF).
The funding announced on Monday includes $3.3 billion under the IMF’s Extended Credit and Extended Financing Programs and $1.4 billion under the new RSF, which aims to help vulnerable middle-income countries and island states.
Staff committee approval reached last November allows for an immediate disbursement of about $476 million to Bangladesh, the IMF said.
The IMF said the 42-month borrowing package “will help preserve macroeconomic stability, protect the vulnerable and promote inclusive and green growth.”
The fund said it includes reforms aimed at creating fiscal space to enable greater social and development spending, strengthening Bangladesh’s financial sector, encouraging fiscal and governance reforms, and building resilience to climate change.
Last October, the IMF announced a new RSF instrument to provide policy support and affordable long-term financing to low-income and vulnerable middle-income countries, in addition to existing lending tools that those countries had access to. RSF options come with a maturity of 20 years and a grace period of 10-1/2 years during which the principal is not repaid.
Funding from the RSF will help support the country’s climate change adaptation and mitigation efforts, the IMF said.