IMF accepts Bangladesh’s request for new loan programme

The International Monetary Fund (IMF) has agreed to Bangladesh’s request for a new loan programme to replace the existing $5.5 billion arrangement, with a staff mission expected to visit Dhaka soon to begin discussions.

In a statement issued yesterday, the international lender said a final decision on the new programme would require approval from its executive board.

“Any new arrangement would need to be based on Bangladesh’s balance-of-payments needs and strong policy commitments anchored by a credible reform agenda, and would be subject to the IMF’s policies and Executive Board approval,” Ivo Krznar, IMF mission chief for Bangladesh, said in the statement.

IMF staff are engaging with the Bangladeshi authorities on their reform agenda and policy priorities as part of the fund’s consideration of possible next steps, he said.

Krznar said the upcoming staff visit would allow the IMF to assess recent economic developments, engage with authorities on policy priorities, and evaluate the outlook and reform challenges.

“Discussions about the parameters of a potential new IMF-supported programme -- including its size and related reform commitments -- would take place in the context of a subsequent program negotiation mission,” he added.

The latest development came after a virtual meeting on May 21 between Finance and Planning Minister Amir Khosru Mahmud Chowdhury and IMF Deputy Managing Director Nigel Clarke.

The two sides discussed Bangladesh’s macroeconomic situation, progress under the ongoing programme, and prospects for future cooperation.

On May 25, the finance minister said the government and the IMF had agreed to a new three-year programme to replace the existing package.

The IMF approved $4.5 billion for Bangladesh in January 2023 under three facilities -- the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).

The package was expanded by $800 million in May last year under the interim government, bringing the total to $5.5 billion. Bangladesh has so far received $3.8 billion across five tranches.

The sixth tranche has been pending since November last year, when the IMF suspended discussions and decided to resume talks with the new government after the February election.

Under the previous schedule, the fifth and sixth tranches – together worth $1.3 billion -- were due by June, with a final tranche expected in December.

Discussions on a replacement programme began during the IMF-World Bank Spring Meetings in April. The lender signalled at the time that no further tranches would be released without visible progress on economic reforms. Virtual talks have since continued weekly over the proposed loan amount and accompanying reform conditions.

While noting that the current arrangements have provided an important policy anchor during a very difficult period, Krznar acknowledged that the macroeconomic and political context had changed substantially since it was approved in 2023.

Authorities now face a more complex set of challenges. Banking-sector weaknesses and low revenue mobilisation, he said, underscored the need for a renewed and sustained reform effort.

“The IMF remains a committed partner to Bangladesh in its efforts to secure lasting macroeconomic and financial stability, strengthen resilience, and support strong, inclusive growth,” Krznar said.