Staff Reporter :
The International Monetary Fund (IMF) has disbursed the fourth and fifth tranches of its loan agreement with Bangladesh, totalling approximately $1.33 billion.
This development has coincided with Bangladesh’s foreign exchange reserves surpassing the $30 billion mark in a single day, bolstered by strong remittance inflows and the release of committed budget support from the World Bank, Asian Development Bank, and Japan International Cooperation Agency (JICA). This marks the first time in two years that reserves have exceeded this level.
On 24 June, the IMF’s executive board approved the release of the two loan instalments, with Bangladesh receiving notification on Thursday. However, the formal accounting and settlement of these funds are expected to be completed after the weekend, with official reserve figures to be published next Monday.
As of 25 June, Bangladesh Bank reported gross reserves of $27.67 billion, while the International Monetary Fund’s BPM-6 accounting method estimates reserves at $22.65 billion. Preliminary central bank estimates place total reserves at $30.30 billion, or $25.51 billion on a BPM-6 basis.
Bangladesh’s reserves peaked at $48 billion in August 2021 during the height of the COVID-19 pandemic, supported by record remittance inflows and robust foreign trade.
However, subsequent global challenges – including rising fuel and food prices and the Ukraine conflict -have exerted upward pressure on import costs, gradually reducing reserve levels. The last time reserves neared $30 billion was on 26 June 2023, when they stood at $30.84 billion.
Since assuming office last August, Bangladesh Bank Governor Ahsan H Mansur has implemented measures to preserve reserves, including restricting the sale of dollars by banks from the reserves. This policy aims to maintain and gradually increase foreign exchange reserves.
Bangladesh’s net reserves, calculated by deducting short-term liabilities from gross reserves according to the IMF’s BPM-6 standard, have been published by Bangladesh Bank since July 2023 following the initial IMF loan approval. Remittance flows remain strong, with $1.98 billion received via formal banking channels in the first 21 days of June alone.
The $4.7 billion loan agreement signed between Bangladesh and the IMF in early 2023 was designed to address the country’s financial challenges. Loan disbursements began in January 2023, with the first tranche of $476.3 million received in February, followed by a second tranche of $682 million in December 2023, and a third tranche of $1.15 billion in June 2024. The total disbursed before the recent instalments amounted to $2.31 billion.
The release of the fourth tranche faced delays due to Bangladesh’s need to fully align its exchange rate policy with market principles and meet other fiscal conditions stipulated by the IMF. After extensive negotiations, including multiple visits and reviews by IMF officials, the institution agreed to release the fourth and fifth tranches together once sufficient progress was demonstrated.
IMF mission chief Chris Papageorgiou noted that despite political and economic challenges in Bangladesh, the country has made satisfactory progress in implementing the terms of the loan agreement. Discussions during the IMF-World Bank Spring Meeting in Washington and subsequent meetings between Bangladeshi officials and IMF representatives helped finalise the loan release.
While Finance Adviser Salehuddin Ahmed expressed confidence that Bangladesh could operate even without the IMF loan, ongoing engagement with the IMF remains a priority to secure financial stability and support macroeconomic reforms. The successful disbursement of these tranches is expected to bolster Bangladesh’s foreign exchange reserves and strengthen its economic outlook amid a challenging global environment.
