Policies should focus on safeguarding fiscal sustainability: IMF
Business Report :
Policies should focus on safeguarding fiscal sustainability and strengthening macro-financial stability, while implementing comprehensive structural reforms over the medium-term to strengthen governance, create jobs, and promote economic diversification in Bangladesh.
The Washington-based multilateral agency made the observation in a statement issued on Friday cautioned against unsecured liquidity injections into weak banks in Bangladesh and urged full implementation of exchange rate reforms.
The International Monetary Fund (IMF) highlighted this as its Executive Board concludes 2025 Article IV Consultation with Bangladesh.
The IMF said following the recent economic slowdown, Bangladesh’s GDP growth is expected to rebound to 4.7 per cent in FY26 and FY27.
The economy continues to face mounting macro-financial challenges from weak tax revenue and financial sector vulnerabilities, with significant downside risks stemming from delays in the implementation of bold fiscal and financial reforms.
In Washington, DC, the Executive Board of the IMF completed the Article IV Consultation for Bangladesh on January 26, 2026. The authorities have consented to the publication of the Staff Report prepared for this consultation.
Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent.
The lender observed an uneven programme performance and emphasised that decisive and sustained policy actions and bold reforms are needed to restore macroeconomic and financial stability and support the country’s long-term development goals.
Bangladesh’s economic growth has slowed recently, while inflation has remained elevated. GDP growth decelerated to 3.7 percent in FY25 from 4.2 percent in FY24 and 5.8 percent in FY23, reflecting production delays during the uprising, a tighter policy mix, and sluggish investment. Headline inflation fell from double-digit levels in early FY25 but remained elevated at 8.2? Percent in October.
Tax revenue to GDP ratio fell sharply in FY25, although the fiscal deficit was contained due to under-execution of capital and social spending. Foreign exchange reserves have begun to rebuild, supported by improvements in the current account.
The economy is expected to recover gradually over the medium term. With implementation of policies to mobilize tax revenue and address financial sector vulnerabilities, growth is projected to rebound to 4.7 percent in FY26 and gradually accelerate to around 6 percent over the medium term.
Inflation is projected to remain elevated at 8.9 percent in FY26 before subsiding to around 6 percent in FY27.
Risks to the outlook are tilted to the downside, mainly from delayed or inadequate policy action and reversals of exchange rate reform and fiscal discipline.
Directors stressed the need for ambitious fiscal reforms and encouraged the authorities to undertake bold tax policy reforms, simplify the tax system, and strengthen tax administration and compliance to mobilise revenue, it added.
The Fund suggested rationalising subsidies, prioritising growth-enhancing investments, enhancing social safety nets, and improving public financial and investment management to support inclusive development and growth.
