Bangladesh requested to IMF's a stabilization package

This week, the IMF formally approved a stabilization package for Bangladesh valued at $4.7 billion. The package is the first given to an Asian country that includes funding from the IMF’s new Resilience and Sustainability Facility, intended to help vulnerable middle-income countries. Bangladesh’s package comes as its neighbors Pakistan and Sri Lanka—under worse economic stress—have struggled to secure new assistance.

The IMF likely has fewer concerns about Dhaka’s economic policies. Announcing the new agreement, IMF Deputy Managing Director Antoinette M. Sayeh praised Bangladesh’s economic growth and said the “COVID-19 pandemic and … Russia’s war in Ukraine interrupted this long period of robust economic performance”—implying that external shocks and not poor policies had provoked the conditions that prompted Dhaka to go to the IMF.

Importantly, Bangladesh requested a stabilization package, not a bailout package, as Pakistan and Sri Lanka have. IMF officials likely saw this as an effort to preempt worsening economic problems down the road. Islamabad and Colombo came to the IMF in bad shape—and that’s because bad policies produced rapidly deteriorating economic conditions, along with political instability. None of this applied in the case of Bangladesh, even with recent protests in response to rising economic stress.

*Michael Kugelman, the Deputy Director of the Asia Program and Senior Associate for South Asia at the Wilson Center, is a leading specialist on Afghanistan, India, and Pakistan and their relations with the United States.