Staff Reporter :
Bangladesh has successfully met crucial conditions related to foreign exchange reserves and arrear reductions in the energy and fertiliser sectors, paving the way for the release of the next installment of the International Monetary Fund (IMF) loan programme.
However, the country once again fell short of its tax revenue collection target.
An IMF mission is set to arrive in Dhaka on 29 October for a two-week review of performance up to June.
The IMF had approved a $4.7 billion loan package in January 2023, later expanding it by $800 million and extending the programme by six months.
With $3.6 billion already disbursed, Bangladesh now aims to unlock the sixth tranche of about $450 million by meeting six Quantitative Performance Criteria (QPCs), three of which were added in May.
According to Bangladesh Bank data, net international reserves (NIR) reached $20.73 billion in June, well above the IMF’s $17.4 billion target, and remained over $20 billion in September. This marks a strong recovery after years of reserve depletion—from nearly $48 billion under the previous administration. The turnaround began after the interim government took office in August last year. Economist Zahid Hussain, former lead economist at the World Bank’s Dhaka office, attributed the improvement to rising remittances, curbed money laundering, and reduced imports.
“With low import demand and higher inflows through official channels, the foreign exchange market now faces excess supply, prompting the central bank to buy dollars to prevent excessive taka appreciation,” he said.
Remittance inflows hit a record $30.33 billion in FY2023–24, up nearly 27 percent, further boosting reserves.
Despite this progress, Bangladesh missed the IMF’s revenue collection target, achieving Tk 378,000 crore against the Tk 443,530 crore goal.
The National Board of Revenue (NBR) collected Tk 370,874 crore—just 2.23 percent higher than the previous year—underscoring chronic weaknesses in the tax system.
The IMF has now made revenue mobilisation a strict QPC, rather than an indicative target, to address the country’s persistently low tax-to-GDP ratio.
A senior NBR official said weak economic growth, political unrest, slow investment, and staff agitation over organisational reforms hindered collections.
He added that disruptions from last year’s political upheaval further dragged revenue down, meaning Bangladesh will likely seek a waiver from the IMF.
However, Bangladesh met new QPCs on clearing arrears to state-owned enterprises. By June, foreign arrears were reduced to $314 million (against the $870 million ceiling) and domestic arrears to Tk 18,000 crore.
Finance Adviser Salehuddin Ahmed confirmed that about $5 billion in foreign dues—including payments to Adani, Chevron, and fertiliser suppliers—had been cleared, much of it accumulated under the previous government.
While officials say Bangladesh met most other programme benchmarks, the IMF may raise concerns over the central bank’s dollar-buying operations and a recent circular on loan rescheduling, which analysts warn could reintroduce old banking sector weaknesses.
