The delayed fourth and fifth instalments of Bangladesh’s $4.7 billion loan package from the International Monetary Fund (IMF), which have faced setbacks due to unmet conditions, may be disbursed simultaneously in June, Finance Adviser Salehuddin Ahmed said.
Speaking after a session of the District Commissioners' Conference at the Osmani Memorial Auditorium in Dhaka on Monday (17 February), Salehuddin confirmed that a final decision on the release of the next two tranches would be made in June, depending on negotiations with the IMF.
"We have informed them that it is not feasible to meet all the conditions at once," said the adviser.
"They have suggested, and we have also proposed, releasing two instalments together in June."
To secure the $4.7 billion loan, Bangladesh must implement a series of financial sector reforms, with specific conditions attached to each disbursement. The release of the fourth instalment, in particular, is contingent upon fulfilling four key requirements: Enhancing revenue collection to manage external pressures, tightening monetary policy to curb inflation, allowing the foreign exchange rate to be fully market-determined, and adopting environmentally sustainable policies to address climate change.
However, the IMF has expressed concerns over Bangladesh’s progress in meeting crucial conditions related to exchange rate reforms and revenue collection.
IMF had initially planned to release $645 million as part of the fourth instalment by 10 February, following a third review and a board meeting scheduled for 5 February.
However, the financial agency postponed its board meeting to 12 March, further delaying the approval of the fourth instalment.
Before granting approval, an IMF mission conducted a review in Dhaka from 4-18 December, assessing Bangladesh’s compliance with the conditions tied to the third tranche.
At the conclusion of the visit, the IMF delegation announced that it had reached a staff-level agreement with the Bangladesh government for an additional $750 million loan.
This supplementary funding is intended to boost the country's foreign exchange reserves, support financial sector reforms, and alleviate broader economic pressures.
If approved by the IMF board, the new loan would raise Bangladesh’s total assistance package from $4.7 billion to $5.3 billion.
In its statement following the December mission, the IMF acknowledged that Bangladesh’s economy had shown signs of stabilisation under the interim government, despite political changes.
However, it also noted that economic activity had slowed considerably, with inflation continuing to rise, adding to the country’s financial challenges.
IMF further highlighted concerns over capital flight, particularly illicit outflows from the banking sector, which have placed significant strain on Bangladesh’s foreign exchange reserves.
Interim government spending has also come under increasing pressure amid declining revenues, further stressing the financial sector.
Given these challenges, the IMF projected that Bangladesh’s GDP growth could decelerate to 3.8% by the end of the 2024-25 fiscal year.
