Countries that approached IMF for loans

Amidst the economic uncertainty, fueled by Russia-Ukraine war and Covid-19 induced supply chain disruption, many countries including Bangladesh, Pakistan, Sri Lanka approached The International Monetary Fund (IMF) to stabilise their dwindling economy.

Bangladesh became the first Asian country to access the newly created IMF's Resilience and Sustainability Facility (RSF) as the global lender on early Tuesday has approved a loan of $4.7 billion for Bangladesh.

Bangladesh will get about $3.3 billion under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) and about $1.4 billion under the Resilience and Sustainability Facility (RSF), read an IMF press release released on early Tuesday.

In south Asia, Sri Lanka and Pakistan also have sought IMF loans as both the countries are facing economic and political turmoil. 

Sri Lanka is in its worst economic crisis in memory and in May officially defaulted on its debt, while Pakistan's reserves have fallen to $3.67 billion — not enough to cover even a month's imports.

On Saturday (28 January), Pakistan prepared two draft ordinances to impose 200 billion rupees in new taxes, accepting IMF demands to resume a stalled loan programme, reported Dawn.

The two draft ordinances prepared for ₹ 100 billion each in taxes and flood levies. Pakistan is also considering discontinuing power subsidies, imposing sales tax on raw materials for exports, as well as, hikes in power, and gas tariffs are also on the agenda, reported Dawn.

The IMF team is expected to reach Islamabad today (31 January) for talks after Prime Minister Shehbaz Sharif gave assurance for implementing these policy measures, which were delayed for almost four months for political reasons as they could have fuelled already-high inflation.

Sri Lanka also hopes to bag the IMF loan soon as Dr Krishnamurthy Subramanian, executive director (India) of the International Monetary Fund (IMF), on 26 January said that Sri Lanka has completed all the requirements to be met for the IMF relief package.

"All the requirements for the IMF relief package for Sri Lanka have been completed and the moment the final assurances from major lending countries is completed, the process would be finalised." Dr Krishnamurthy Subramanian said, reports Colombo Page.

However on Monday (30 January), The International Monetary Fund and Cameroon have reached a staff-level agreement that will give the country access to around $74.6 million once the Board formally completes the review.

Earlier on the same day (30 January), IMF also approved today a thirty-six-month Extended Credit Facility (ECF) arrangement for Guinea-Bissau in the amount of $38.4 million.

The ECF arrangement is essential to improve donor and private sector confidence and catalyze much-needed concessional financing from the international community.

The IMF has disbursed about US$14 billion loan to 53 low-income countries during the pandemic in 2020 and in the first half of 2021.

Most of this support was through the Fund's emergency financing instruments—the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI)—which provide immediate, one-time disbursements to countries facing urgent balance of payments needs, read an IMF release. 

The IMF also provides emergency financial assistance and debt relief to member countries facing the economic impact of the Covid-19 pandemic. 

The low-Income countries that gets IMF approval for emergency financial assistance and debt relief during the pandemic in 2022 are shown below:

On 21 October 2022 Malawi and IMF Reaches Staff-Level Agreement to disburse about US$88.3 million in emergency financing through new Food Shock Window.

Earlier on 31 August 2022, The IMF Board approved SDR 978.2 million (about $1.3 billion) 38-month ECF arrangement for Zambia to help restore macroeconomic stability and foster higher, more resilient, and more inclusive growth. 

Earlier on 18 July 2022, IMF Executive Board Approves a 40-month, $1,046.4 million ECF Arrangement for Tanzania to assist the economic recovery and address the spillovers from Russia's invasion of Ukraine, help preserve macroeconomic stability, and support structural reforms toward sustainable and inclusive growth.

On 18 July 2022, the IMF Executive Board approved the disbursement of US$9.03 million in emergency financing to help Tonga meet its urgent balance of payments needs for reconstruction and social protection.

On 8 July 2022,   IMF Executive Board Approves US$638 million Extended Fund Facility and Extended Credit Facility for Benin to help address pressing financing needs, support the country's National Development Plan centered on achieving Sustainable Development Goals (SDGs), and catalyze donor support.

On 9 May 2022, IMF Executive Board approves US$456 Million Extended Credit Facility Arrangement (ECF) for Mozambique to support the economic recovery and policies to reduce public debt and financing vulnerabilities, creating space for priority investments in human capital, climate adaptation and infrastructure.

On 12 January 2022, IMF Executive Board Approves US$395.9 Million ECF Arrangement for Nepal to assist the authorities' Covid-19 response in mitigating the pandemic's impact on health and economic activity, protect vulnerable groups, preserve macroeconomic and financial stability, will help fill financing gaps and will catalyze additional financing from development partners.

The IMF has provided financial assistance around the world throughout its 75-year history. 

According to IMF data, the financial assistance includes: Reconstructing the international payments system post-World War II, assisting newly-independent African nations in the 1960s, supporting economies navigate oil shocks in the 1970s, helping Former Soviet Union nations transition to market-based economies, providing financial assistance to Mexico, Turkey, and key emerging market countries in Asia in the capital flow crises of the 1990s, catalyzing and providing multilateral debt relief to over 30 heavily indebted and low-income countries in the late 1990s/2000s, supporting major economies, particularly in Europe, following the Global Financial Crisis, bringing timely financial support to Guinea, Liberia and Sierra Leone to fight the 2015 Ebola outbreak.