IMF stalls $1.3b payout to BD
The International Monetary Fund (IMF) has decided not to release the next tranche of Bangladesh’s ongoing loan programme by June, citing delays in implementing key reforms in revenue mobilisation and the banking sector. The lender has, however, indicated a preference for negotiating a new financing arrangement with additional conditions.
The development was confirmed by a member of the Bangladesh delegation attending the IMF–World Bank Spring Meetings in Washington, DC, led by Finance Minister Amir Khosru Mahmud Chowdhury.
According to the official, the IMF informed Bangladesh during recent discussions that the expected $1.3 billion disbursement under the current $5.5 billion programme will not be released on schedule.
Bangladesh is still due to receive $1.86 billion under the programme, which is set to expire next January.
“The IMF said Bangladesh has not met key reform conditions related to revenue mobilisation, banking sector restructuring, subsidy rationalisation, and a market-based exchange rate system,” the official said. “They are not willing to release the next tranche without a detailed review of implementation.”
The official added that even if Bangladesh agrees to accelerate reforms, any disbursement could be delayed until September, as the IMF would require time for reassessment.
He also noted that the lender appears more inclined towards designing a new programme rather than continuing the current arrangement unchanged.
Concerns have also been raised over Bangladesh’s proposed Bank Resolution Bill, particularly Section 18A, which could allow former bank owners under resolution to regain control.
The IMF has further criticised proposals to use state budget resources to compensate depositors of troubled banks, arguing that deposit insurance mechanisms should be utilised instead.
Bangladesh is seeking additional external financing from the IMF, World Bank and other development partners amid rising import costs, particularly for fuel. This comes against a backdrop of global energy price volatility linked to geopolitical tensions.
Under the current programme, Bangladesh entered into a $4.7 billion IMF agreement in 2023, later expanded by $800 million, bringing the total to $5.5 billion. So far, $3.64 billion has been disbursed. A tranche due in December last year was already withheld, and Bangladesh had hoped to combine it with the June instalment for a larger payout.
However, IMF officials have not provided any assurance regarding disbursement. Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, recently said that Bangladesh must undertake significant reforms in fiscal management, banking stability and exchange rate policy.
He noted that Bangladesh’s tax-to-GDP ratio has declined in recent years and remains insufficient to meet development needs.
“Revenue mobilisation has weakened, and substantial reforms are required across fiscal and financial sectors,” he said.
Economists say Bangladesh has fallen short of commitments under the programme, including raising revenue collection through reduced tax exemptions and improved compliance.
Progress in banking sector reforms has also been limited, while the transition to a fully market-based exchange rate remains incomplete. Targets for reducing energy subsidies have likewise seen delays.
Experts warn that failure to secure full disbursement could affect Bangladesh’s credibility with international lenders.
At the same time, they acknowledge that meeting all IMF conditions within the remaining programme period will be challenging given current economic pressures.
Former finance officials note that Bangladesh has previously been unable to secure final IMF tranches due to unmet conditions, with only one past programme fully completed.
They suggest that the government may now face a choice between fully committing to reforms or seeking a revised arrangement under a new programme.
