No deal reached in IMF talks over $4.7b loan tranches
Staff Reporter :
Negotiations between the International Monetary Fund (IMF) and Bangladesh concluded in Washington without an agreement on the release of the next two tranches – fourth and fifth – of a $4.7 billion loan package.
Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, stated, “Good progress is being made, but I won’t put a timeline on when we can reach an agreement,” during a press briefing at the World Bank-IMF Spring Meetings.
Bangladesh Bank Governor Ahsan H Mansur told reporters after meeting IMF officials that while a consensus had not yet been reached, the two parties were “not far away.”
The Bangladesh delegation, led by Finance Adviser Salehuddin Ahmed, held several rounds of discussions with IMF representatives in Washington.
Before the delegation’s visit, an IMF team had completed a two-week mission in Dhaka on April 17, but no staff-level agreement was achieved. Disagreements remained over the flexibility of the exchange rate and measures to improve the country’s revenue-to-GDP ratio.
IMF mission chief Chris Papageorgiou had expressed that discussions were ongoing, with the aim of reaching a staff-level agreement in the near future, potentially during the Spring Meetings.
Governor Mansur stated that Bangladesh had reached an agreement on the revenue issue. However, he maintained that the country disagreed with the IMF’s stance on the exchange rate, citing the stability of the market. He argued, “We have not sold a single dollar, nor have we intervened.
The market is stable, and if we follow the IMF’s recommendation and the exchange rate becomes unstable, we question whether that is acceptable.”
He further clarified that Bangladesh would only accept terms that were “suitable” for the country, noting, “We are under no compulsion to accept all their terms, as we are not in a situation like Sri Lanka or Pakistan.”
During the Washington meetings, the IMF proposed that Bangladesh retain the crawling peg mechanism for the Taka-dollar exchange rate.
Under this mechanism, the central bank would intervene if the exchange rate fluctuated by more than 8 to 10 percent. However, Bangladesh Bank argued that tighter control over the exchange market was necessary, citing concerns about manipulation and high inflation.
Governor Mansur also insisted that the absence of the IMF loan would not destabilise the country, stating, “We will continue with tight monetary and fiscal policies, with or without IMF support.”
He emphasised that Bangladesh’s economy was not fragile and that the country would continue implementing reforms, particularly in the banking sector, to stabilise the exchange rate and achieve broader macroeconomic stability.
The Governor described the IMF loan as a “sweetener” that would not significantly impact the country. He reassured that the reserves were stable, no dollars had been sold, and exports were on the rise.
“We are hopeful of achieving double-digit export growth, so there is no crisis in the balance of payments,” he added.
Discussions with the IMF are primarily focused on reforms in the financial and revenue sectors, with Bangladesh valuing the IMF’s attention to these areas.
However, Governor Mansur stressed that ensuring the autonomy of Bangladesh Bank was far more important than securing funding, as a strong, independent central bank would protect the financial sector from political interference.
He also cautioned against over-reliance on budget support loans, as these must be repaid and do not contribute to long-term investment.
In December 2024, an IMF mission visited Dhaka to assess Bangladesh’s progress in meeting the conditions for the fourth tranche of the loan, initially scheduled for a decision on 5 February 2025. However, delays occurred as Bangladesh failed to meet prior conditions related to revenue collection and exchange rate flexibility.