Dhaka, May 9 (EFE).- The International Monetary Fund (IMF) has reached a staff-level agreement to release $1.152 for Bangladesh in the third tranche of a $4.7 billion loan package as much-needed economic relief for the South Asian country.

The IMF announce the agreement on Wednesday at the conclusion of a visit by its team to Dhaka.

The IMF team, which began its visit to Dhaka on Apr. 24, held discussions with Bangladesh authorities over the economic and financial policies of the country before announcing the staff-level agreement for releasing the fund.

The agreement is subject to approval by the Executive Board, which is expected in the coming weeks.

"The authorities have made significant progress on structural reforms under the IMF-supported program, including the implementation of a formula-based fuel price adjustment mechanism for petroleum products," Chris Papageorgiou, who led the IMF mission team, said in the statement.

The IMF released its first tranche of $476 million in February last year, immediately after the approval of the 42-month credit facility.

The second tranche of $681 million was released in December.

Bangladesh has been facing multiple economic challenges in recent months, with inflation remaining consistently high at over 9 percent since March 2023.

Inflation is projected to remain elevated at approximately 9.4 percent year-on-year in the current financial year, which will end in June.

However, it is expected to decline to around 7.2 percent in the next financial year on the back of a continued tighter policy mix and projected lower global food and commodity prices, according to the IMF.

The IMF also hoped Bangladesh's GDP would grow by 6.6 percent in the next financial year, up from the projected growth of 5.4 percent in the current fiscal year.

"The macroeconomic outlook is expected to gradually stabilize as policy actions start to take hold," Papageorgiou said.

The IMF announcement coincided with Bangladesh devaluing its local currency taka by over 6 percent to 117 from 110 against the US dollar on Wednesday, one of its highest single-day devaluations in recent years, reportedly at the insistence of the global lender.

The country is currently facing a severe dollar crisis, with foreign exchange reserves dropping to $25.13 billion in April from $46.154 billion in December 2021, according to the central Bangladesh Bank's data.

According to the balance of payments and international investment position manual, the country's foreign exchange reserves were $19.97 billion at the end of April.

"Bangladesh Bank should continue the transition to risk-based supervision to enhance financial sector resilience, while continuing legal reforms to improve corporate governance and regulatory frameworks," the IMF mission chief added. EFE

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