Bangladesh is poised to receive $645 million as the fourth tranche of its loan programme from the International Monetary Fund (IMF) by 10 February, subject to the fulfilment of specific prior conditions, said Chris Papageorgiou, the leader of the IMF staff team.
"IMF would present the proposal for the disbursement of the fourth tranche of the loan to its board on 5 February," he said during a press briefing held on Thursday (19 December) at the conference room of the Finance Division.
IMF has painted a bleak picture of Bangladesh’s economy, citing persistently high inflation, which has exceeded its projections.
Chris Papageorgiou expressed concern over the continued rise in food prices in the country.
The IMF urged the interim government to take effective measures to curb commodity prices.
Highlighting the pressure on Bangladesh’s foreign exchange reserves, Papageorgiou noted that the economy remains under significant strain due to inflation, which could lead to reduced growth and a decline in revenue collection.
The IMF has also raised alarms over the printing of new currency to inject into the market.
While Bangladesh Bank has assured the IMF that these newly printed notes will be swiftly withdrawn from circulation, the IMF cautioned that failure to do so could exacerbate inflation, further burdening the public.
Before disbursing the next instalment, the IMF will conduct a fourth review in March or April, Papageorgiou stated.
He projected GDP growth for the current fiscal year at 3.8%, impacted by recent floods and student-led uprisings.
However, he expressed optimism that growth could rebound to 6.7% in the 2025-26 fiscal year.
Papageorgiou also revealed that Bangladesh has requested an additional $750 million under its ongoing loan programme.
The IMF acknowledged that Bangladesh has met its reserve conditions, with net reserves now standing at $15.58 billion.
Earlier IMF consented to provide Bangladesh $750 million loan as the third tranche of a $4.7 billion loan.
“IMF and Bangladesh have reached staff-level agreement on the policies needed to complete the 3rd review of IMF supported Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF),” said an IMF press release.
The staff-level agreement is subject to approval by the Executive Board, which is expected in the coming weeks, it said.
An IMF staff team led by Chris Papageorgiou visited Dhaka in December to discuss economic and financial policies in the context of the third review of the IMF-supported loan.
“The timely formation of an interim government has fostered a gradual return to economic normalcy. However, economic activity has slowed significantly, and inflation remains elevated. Capital outflows, particularly from the banking sector, have pressured foreign exchange reserves. Additionally, tax revenues have declined, while spending pressures have increased. These challenges are further exacerbated by stress in parts of the financial sector,” he said.
“Amid significant macroeconomic challenges, the authorities requested an augmentation of SDR 567.2 million (approximately $750 million) in IMF financial support to Bangladesh under the ECF and EFF arrangements. This increase would bring the total financial assistance under the ECF and EFF arrangements to SDR 3,035.7 million (about $4 billion), alongside concurrent RSF arrangements of SDR 1 billion (about $1.3 billion). Upon completion of the third review, SDR 491.9 million (about $645 million) will be made available, comprising SDR 325.2 million (about $426 million) under the ECF and EFF and SDR 166.7 million (about $219 million) under the RSF.”
