Washington: The International Monetary Fund (IMF) Executive Board has approved financial assistance of USD 987 million for Bangladesh, with immediate disbursement of USD 141 million.

The financial assistance under Extended Credit Facility is designed to support the authorities' programme, which aims to restore macroeconomic stability, strengthen the external position and engender higher, more inclusive growth, the IMF said in a statement.

IMF Deputy Managing Director and Acting Chair Naoyuki Shinohara said macroeconomic pressures have intensified in Bangladesh since late 2010 due to a negative terms-of-trade shock, rising oil and infrastructure-related imports, and accommodative policies.

"More recently, a weakening in external demand and a surge in oil prices have further weakened Bangladesh’s balance of payments and added to fiscal and inflationary pressures," he said.

"The authorities’ programme focuses on policy adjustments and structural reforms aimed at restoring macroeconomic stability, strengthening the external position, and promoting higher, more inclusive growth," Shinohara said.

Under the programme, upfront tightening of macroeconomic policies are being undertaken, supported by structural reforms to strengthen tax policy and administration, public financial management, and financial sector oversight.

A moderate fiscal consolidation path will be underpinned over the medium term by a modernisation of the tax regime and rationalisation of subsidy costs, in order to create fiscal space for more social and development spending and to contain public debt, Shinohara said.

(Agencies)