IMF Backs Bangladesh's Reform Drive as Talks Advance on Fresh $4.5bn Loan Package

The International Monetary Fund (IMF) has endorsed the government's sweeping economic reform agenda, expressing satisfaction with progress in overhauling the financial sector, revitalising the capital market and boosting Bangladesh's tax-to-GDP ratio, as negotiations over a fresh multi-billion-dollar lending programme gather momentum.

Finance Minister Amir Khasru Mahmud Chowdhury disclosed the development after meeting an 11-member IMF delegation at the Secretariat on Monday, saying the Fund had delivered a positive assessment of the government's reform drive.

He said both sides agreed that reforms should be implemented in a phased and carefully sequenced manner to ensure sustainable outcomes.

"The IMF is satisfied with the government's initiatives to reform the financial sector, strengthen the capital market and improve the tax-to-GDP ratio," the Finance Minister told reporters. He, however, clarified that the proposed new pay scale for government employees did not come up during the discussions.

The meeting reviewed Bangladesh's overall macroeconomic outlook, the proposed new IMF lending programme, the second Resilience and Sustainability Facility (RSF), the national budget, revenue mobilisation, banking sector reforms, foreign exchange reserves, energy subsidies, capacity charge payments and governance in the financial sector.

The Finance Minister said discussions on the proposed loan programme had progressed encouragingly, although it remained premature to indicate when the new financing could be approved. “If the IMF mission maintains its favourable assessment, it will submit its recommendations to the Fund's headquarters in Washington for further consideration”.

He said another IMF delegation led by one of the Fund's vice-presidents is expected to visit Bangladesh after the IMF-World Bank Annual Meetings, scheduled to be held in Bangkok from October 12 to 18, to begin formal negotiations on the proposed package. 

Subject to the outcome of those talks, Bangladesh could secure fresh IMF financing of around US$4 billion to US$4.5 billion.
Bangladesh's existing IMF programme, initially approved in 2023 for US$4.7 billion, was subsequently expanded to US$5.5 billion under the interim government, of which the country has already received US$3.59 billion.

The current government has argued that several conditions attached to the previous programme did not adequately reflect Bangladesh's economic priorities or public interest. It is therefore seeking a new financing framework that better supports its reform agenda while safeguarding economic stability.

The IMF delegation, led by Bangladesh Mission Chief Ivo Krznar, is on a visit to Dhaka until July 16.
 
During its mission, the team is holding consultations with the Ministry of Finance, Bangladesh Bank and other government agencies to assess the country's macroeconomic conditions, review ongoing structural reforms and advance discussions on the proposed new loan programme.