The International Monetary Fund (IMF) has reaffirmed its commitment to support Bangladesh’s interim government in addressing economic challenges. During a fact-finding mission to Dhaka, the IMF highlighted increasing financial sector vulnerabilities. It praised the government’s efforts to implement necessary policy adjustments, such as monetary tightening and rationalizing capital spending.
Bangladesh’s interim government has requested a new $3 billion loan from the IMF, in addition to the existing $4.7 billion loan program. Of the $4.7 billion, $2.3 billion has already been disbursed. Further discussions regarding the new loan will take place at the 2024 IMF-World Bank Annual Meetings in Washington DC.
The IMF noted that economic activity in Bangladesh has slowed significantly, while inflation continues at double-digit levels. The country’s balance of payments has deteriorated, putting pressure on foreign exchange reserves. Additionally, tax revenues have fallen, while government spending has increased, leading to growing domestic payment arrears.
The IMF expressed concern over the state of Bangladesh’s financial sector and the accumulating challenges facing the economy. However, it reiterated its commitment to working closely with the authorities to implement reforms aimed at ensuring macroeconomic stability. These reforms will focus on promoting job creation, strengthening institutions, and fostering sustainable and equitable growth.
IMF Managing Director Kristalina Georgieva recently met with Bangladesh’s Chief Adviser, Professor Muhammad Yunus, during the United Nations General Assembly in New York. At the meeting, Georgieva assured the interim government that the IMF would fast-track financial support and potentially initiate a new loan program based on the team’s findings.
During their visit, the IMF team met with key officials, including Finance Adviser Salehuddin Ahmed and Bangladesh Bank Governor Ahsan H Mansur. They also held discussions with representatives from the private sector, think-tanks, bilateral donors, and development partners.
The IMF expressed condolences for the recent loss of lives during the student-led public uprising. It acknowledged the stabilizing effect of the interim government and noted that this has helped restore political and economic stability.
The IMF remains committed to supporting Bangladesh through these difficult times and will continue working with the government to ensure long-term economic growth and stability. Further discussions on the ongoing loan program and potential future lending will continue during the IMF-World Bank Annual Meetings in October 2024.