NN Online:
The International Monetary Fund (IMF) has approved a $1.3 billion disbursement to Bangladesh as part of its ongoing $4.7 billion loan program. This follows the completion of the third and fourth reviews under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).
According to an IMF press release, the Executive Board approved an augmentation of SDR 567.19 million (approximately $746 million) to the ECF/EFF arrangements and granted a six-month extension. With this decision, Bangladesh can now immediately access SDR 650.5 million (around $884 million) under the ECF/EFF, and SDR 333.3 million (around $453 million) under the RSF.
The Board also approved modifications to performance criteria and issued a waiver for non-compliance with restrictions on foreign exchange, citing corrective measures and the temporary nature of the breach.
Originally approved on January 30, 2023, Bangladesh’s ECF/EFF/RSF arrangements amounted to SDR 3.5 billion (about $4.7 billion). With the recent augmentation, total IMF assistance now stands at SDR 3.04 billion (about $4.1 billion) under the ECF/EFF and SDR 1 billion (about $1.4 billion) under the RSF.
The funding aims to restore macroeconomic stability, promote inclusive growth, and strengthen climate resilience. The RSF, in particular, provides critical fiscal space for climate-related initiatives.
Since the political upheaval and government change in mid-2024, Bangladesh has faced mounting macroeconomic challenges. While the interim government has brought some stability, persistent political uncertainty, global trade tensions, and stress in the banking sector have further strained the economy.
Despite these difficulties, the IMF noted that Bangladesh’s performance under the program remains broadly satisfactory. The government has taken key steps, including reforms to enhance exchange rate flexibility and improve tax revenue collection.
Following the review, Deputy Managing Director and Acting Chair Nigel Clarke emphasized that IMF-backed reforms are helping stabilize the economy, protect vulnerable populations, and support resilient, inclusive growth.
Clarke added that near-term policy should focus on reducing inflation, rebuilding external buffers, and improving fiscal health through subsidy rationalization and enhanced public financial management.
He also highlighted the importance of financial sector reforms, export diversification, improved governance, and better data quality to support Bangladesh’s goal of becoming an upper middle-income country.
Regarding climate resilience, the RSF continues to play a vital role in helping Bangladesh strengthen institutions, coordinate policy, and attract climate financing.
