IMF board okays $1.3b of $4.7b loan program for Bangladesh

Banglapress Published: 23 September 2025, 10:25 AM

IMF board okays $1.3b of $4.7b loan program for Bangladesh

Bangla Press Desk: The International Monetary Fund (IMF) has approved a US$1.3 billion disbursement of the third and fourth tranches of Bangladesh's $4.7 billion loan program. “The Executive Board of the IMF completed the combined 3rd and 4th Reviews of Bangladesh’s arrangements under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF). The Executive Board also approved an augmentation of SDR 567.19 million (53.2 percent of quota) for the ECF/EFF arrangements and a six-month extension. Completion of these reviews allows the authorities to immediately withdraw SDR 650.5 million (about $884 million) under the ECF/EFF, and SDR 333.3 million (about $453 million) under the RSF,” said a IMF press release issued here today. Further, the IMF Executive Board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions, based on the temporary nature of the non-observance and the implementation of corrective measures. Bangladesh’s arrangements under the ECF/EFF/RSF were approved on January 30, 2023, in an amount equivalent to SDR 2.5 billion (154.3 percent of quota or about US$3.3 billion) under the ECF/EFF and SDR 1 billion (93.8 percent of quota or about US$1.4 billion) under the RSF (PR no. 23/25)

The augmentation approved by the Executive Board today brings the total financial assistance under the ECF and EFF arrangements to SDR 3,035.65 million (about US$ 4.1billion), alongside concurrent RSF arrangements of SDR 1 billion (about US$1.4 billion). The enlarged enhanced ECF/EFF is aimed at restoring macroeconomic stability, promoting inclusive growth, and protecting the vulnerable. The RSF arrangement has secured fiscal space needed to build resilience against climate risks. Bangladesh’s macroeconomic challenges have increased since the popular uprising in the summer of 2024, which led to the ouster of the previous government. The timely formation of an interim government has helped stabilize political and security conditions, fostering a gradual return to economic stability. However, the economic outlook has worsened due to persistent political uncertainty, continuation of tighter policy mix, rising trade barriers, and increasing stress in the banking sector. Program performance for the third and fourth reviews remains broadly satisfactory despite the difficult political and economic context. The authorities are fully committed to implementing necessary policies under the program and have recently pressed forward with critical reforms to increase exchange rate flexibility and boost tax revenues. The authorities have consented to the publication of the Staff Report prepared for this consultation. Following the Executive Board’s discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:

“Bangladesh’s economy continues to navigate multiple macroeconomic challenges. Despite a difficult environment, program performance has remained broadly on track, and the authorities are committed to implementing necessary policy actions and reforms. The IMF-supported programs are helping safeguard macroeconomic stability and protect the most vulnerable, while accelerating reforms to support resilient and inclusive growth. “Near-term policies should prioritize rebuilding external resilience and reducing inflation. The authorities’ recent steps to implement a new exchange rate regime and include revenue-enhancing measures in the FY2026 budget are welcome. A balanced policy mix—anchored in maintaining a tight monetary policy stance, greater exchange rate flexibility, and revenue-based fiscal consolidation—will support efforts to restore both external and internal balances. “Efforts to raise tax revenues and rationalize expenditures—including through subsidy reduction—are critical for creating the fiscal space needed to strengthen social, development, and climate initiatives. Sustained progress in reducing government subsidies to a fiscally sustainable level, along with enhanced public financial management, is essential to improving spending efficiency and mitigating fiscal risks. “Financial sector policy should prioritize safeguarding stability and addressing rising vulnerabilities. Developing a comprehensive, sequenced strategy to guide reforms is an immediate priority, followed by the swift implementation of the new legal frameworks to enable orderly bank restructuring while protecting small depositors.

“Sustained structural reforms are essential for Bangladesh to achieve its goal of attaining upper middle-income status. Key priorities include diversifying exports, attracting greater foreign direct investment, strengthening governance, and enhancing data quality. “Building resilience to natural disasters is essential for achieving high and inclusive growth. The RSF’s focus on strengthening institutions and policy coordination as well as on enhancing the efficiency of climate-related spending remains critical, including in helping mobilize climate finance.” This article was originally published on Daily Sun. [Bangla Press is a global platform for free thought. It provides impartial news, analysis, and commentary for independent-minded individuals. Our goal is to bring about positive change, which is more important today than ever before.] BP/ZE

[Bangla Press is a global platform for free thought. It provides impartial news, analysis, and commentary for independent-minded individuals. Our goal is to bring about positive change, which is more important today than ever before.]