Bangladesh is to hold talks with the International Monetary Fund after applying for a bailout to prevent the country running out of cash.The government in Dhaka – the third in south Asia to seek a financial rescue package from the IMF after Pakistan and Sri Lanka – is understood to want $4.5bn (£3.7bn) after it was hit hard by high import prices, especially for gas, and a fall in exports as the global economy slowed down.The IMF said Bangladesh was also interested in its new resilience and sustainability facility, which is aimed at helping countries face climate change challenges.“The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on programme design as per the established policies and procedures of the fund,” an IMF spokesperson said.

“The amount of support will be part of the programme design discussions.”Bangladesh‘s $416bn economy has been one of the fastest-growing in the world for years and is based mainly on a garment industry that supplies retailers in Europe, the US and South America.However, rising energy and food prices caused by Russia’s invasion of Ukraine have inflated Bangladesh’s import bill, sending its balance of payments into deficit.About 90 countries have sought support from the IMF during the pandemic, but only a handful have been forced to seek bailouts to avoid defaulting on loans or being unable to pay bills.Overall, the Washington-based lender of last resort is making about $250bn, a quarter of its $1tn lending capacity, available to member countries.Bangladesh’s finance minister, AHM Mustafa Kamal, said the government would take an IMF loan only if conditions were favourable, after he denied the underlying financial situation facing the country of 170 million people meant draconian reforms were needed.“If the IMF conditions are in favour of the country and compatible with our development policy, we’ll go for it, otherwise not,” Kamal said.

“Seeking a loan from the IMF does not mean Bangladesh’s economy is in bad shape.”The IMF’s Resilience and Sustainability Trust caps funds at 150% of a country’s quota, which broadly reflects its relative position in the world economy, or, in Bangladesh’s case, a maximum of $1bn.In the past IMF officials have insisted bailouts are accompanied by stringent demands for transparency about where the funds are spent.

The lender has also demanded an end to subsidies for businesses and households that it considers unaffordable, as the price of any loan.Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDeskBangladesh’s Daily Star newspaper reported that overall, the country wanted $4.5bn from the IMF, including for budgetary and balance-of-payment support.Figures for Bangladesh’s foreign exchange reserves fell to $39.7bn in July – sufficient for just over five months worth of imports – down from $45.5bn a year earlier.Its July to May current account – which measures the gap between exports and imports – was $17.2bn in deficit, compared with a $2.8bn shortfall in the same period last year, as its trade deficit widened and remittances fell..

This article first appeared/also appeared in theguardian.com