The release of the next tranche of the International Monetary Fund鈥檚 $4.7 billion loan to Bangladesh may face further delay, as the IMF has yet to reach a staff-level agreement with the government.
An IMF mission led by Chris Papageorgiou visited Dhaka from April 6 to 17 to review the country鈥檚 economic and financial policies. After concluding the meeting, IMF held a press conference at Bangladesh Bank head office on Thursday.
The fourth tranche of the loan, originally scheduled for March, has been delayed as Bangladesh failed to meet some of the agreed prior conditions.
The IMF approved the $4.7 billion loan package in early 2023, and Bangladesh has so far received $2.3 billion through three disbursements. Each tranche is contingent upon the government meeting reform conditions agreed with the IMF.
Chris Papageorgiou said 鈥楧iscussions are continuing with the objective of reaching a staff-level agreement in the near term 鈥� including during the April 2025 IMF-World Bank Spring Meetings in Washington, DC鈥� on the parameters and policies needed to sustain reform momentum under the programme.鈥�
Officials cited unresolved issues surrounding revenue mobilisation, exchange rate flexibility, and a credible macroeconomic framework amid ongoing shocks from recent domestic unrest and global developments.
According to the IMF, Bangladesh鈥檚 GDP growth fell sharply to 3.3 per cent in the first half of FY25, down from 5.1 per cent during the same period last fiscal year.
The slowdown is attributed to tighter monetary and fiscal policies, political unrest surrounding the popular uprising, and declining investor confidence.
Inflation, though easing from its July 2024 peak of 11.7 per cent to 9.4 per cent in March 2025, remains well above the central bank鈥檚 target of 5 to 6 per cent.
The IMF stressed that tighter monetary policy is necessary to bring inflation under control and restore stability.
Papageorgiou said that the Bangladeshi economy continues to face multiple challenges amid elevated global uncertainty.
He noted that to address the widening external financing gap and ensure inflation continues to fall, near-term policy tightening remains essential.
The IMF has placed strong emphasis on fiscal reforms. Bangladesh鈥檚 tax-to-GDP ratio is one of the lowest in the world, which the IMF says hampers the government鈥檚 ability to fund essential social and infrastructure spending.
The IMF is urging the government to eliminate widespread tax exemptions, simplify the tax structure, and establish a clearer separation between tax policy and tax administration.
Without such changes, it warned, public investment and service delivery will remain constrained.
Papageorgiou stressed the need for a comprehensive strategy to boost revenue and improve expenditure efficiency, calling for a more equitable, transparent, and streamlined tax system.
Exchange rate policy remains another critical issue. The IMF has repeatedly called for more flexibility in the exchange rate regime to help rebuild foreign exchange reserves and enhance the country鈥檚 external competitiveness.
Bangladesh Bank has been reluctant to move in that direction, citing concerns over market volatility and the narrowness of the financial market.
The IMF acknowledged these concerns but warned that resisting adjustment would delay recovery and weaken reserves.
Papageorgiou said greater exchange rate flexibility is essential to support price competitiveness, rebuild reserves, and strengthen resilience against external shocks.
The fragile banking sector also drew the IMF鈥檚 attention. The Fund pointed to the high level of non-performing loans, which are restricting credit to productive sectors.
It called for swift legal reforms to facilitate bank restructuring, strengthen depositor protection, and improve governance at Bangladesh Bank.
The IMF also urged more effective asset quality reviews and stronger risk-based supervision.
Papageorgiou underscored the importance of institutional reforms to enhance the independence of the central bank, adding that well-sequenced financial sector reforms are necessary to maintain long-term macroeconomic stability.
The IMF鈥檚 reform agenda extends beyond immediate macroeconomic stabilisation.
The lender called for structural reforms to improve governance, combat money laundering, and enhance climate resilience.
It emphasised the importance of building institutional capacity and investing in sustainable infrastructure to ensure a resilient recovery.
Without structural reforms, the IMF warned, the country鈥檚 economic vulnerabilities will persist and prospects for a sustained recovery will remain weak.
Although no agreement was reached during the Dhaka visit, IMF officials said discussions with Bangladeshi authorities are moving forward.
