Talks between Bangladesh and the International Monetary Fund (IMF) have concluded in Washington without any agreement on the disbursement of the fourth and fifth tranches of the $4.7 billion loan package.
"Good progress is being made, but I will not put a timeline on when we can reach agreement," remarked Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, during a press briefing on the sidelines of the World Bank-IMF Spring Meetings.
Bangladesh Bank Governor Ahsan H Mansur echoed a similar sentiment following discussions with IMF officials on 25 April, stating, "We have not reached a consensus, but we are not far away."
The Bangladesh delegation, led by Finance Adviser Salehuddin Ahmed, engaged in a series of meetings with IMF representatives after an earlier IMF mission to Dhaka ended on 17 April without achieving a staff-level agreement.
Key points of contention remained: the flexibility of the exchange rate and efforts to raise the country’s revenue-to-GDP ratio.
"We are under no compulsion to accept all their terms, as we are not in a situation like Sri Lanka or Pakistan," asserted Governor Mansur, projecting confidence in Bangladesh's economic stability.
During the meetings, IMF team chief Chris Papageorgiou emphasised the necessity of greater exchange rate flexibility, a view reaffirmed by Srinivasan, who called for "more action and a clear timeframe" to ensure proper policy implementation. He also flagged revenue mobilisation as crucial for financing development priorities.
On the question of reforms, Mansur indicated progress on the revenue front but resisted IMF pressure on the exchange rate. "The market is stable. We have not sold a single dollar, nor intervened," he said at a briefing posted by Golam Mortoza, Press Minister at Bangladesh’s embassy in the United States.
"If we follow the IMF and the exchange rate becomes unstable, whether that is acceptable is our question," Mansur said pointedly. He underscored that Bangladesh would adopt only those IMF conditions it deemed appropriate.
The IMF had recommended that Bangladesh retain a "crawling peg" mechanism for the Taka-dollar exchange rate, allowing limited fluctuation before intervention. However, Bangladesh Bank argued for tighter control, citing risks of manipulation and inflationary pressures.
"We think the timing is not right for greater flexibility," an official from the Bangladesh delegation explained, contrasting with Papageorgiou’s earlier assertion that "this is, in fact, the right time" for such reforms.
Mansur warned of potential instability if the exchange rate surged beyond Tk135 to the dollar, threatening macroeconomic balance and energy prices.
Notably, the governor, a former IMF official himself, struck a sanguine tone about the potential absence of IMF funding. "If we do not receive the IMF loan, it will not derail us. We will continue with tight monetary and fiscal policies, with or without IMF support."
He insisted Bangladesh’s economy is no longer fragile, highlighting a rise in export orders through Christmas and stable foreign exchange reserves.
Describing the IMF loan as a "sweetener" rather than a lifeline, Mansur emphasised that Bangladesh’s main focus was on implementing necessary reforms rather than securing external financing.
"Ensuring the autonomy of Bangladesh Bank is far more important than securing funding," he stated, cautioning against overreliance on budget support loans.
The review for the fourth tranche, initially slated for IMF board decision on 5 February, was delayed due to unmet conditions, particularly on revenue collection and exchange rate reforms. It was later decided that the fourth and fifth tranches would be combined, prompting the latest round of talks.
While discussions remain ongoing, both sides appear committed to bridging the gap — though, as yet, no deal is in sight.
