Fresh IMF credit plan under discussion
The government has decided to move away from the existing loan arrangement signed with the International Monetary Fund (IMF) under the previous Awami League administration and instead pursue a new financing package worth approximately $5 billion under revised terms and conditions.
The policy shift was confirmed during a virtual meeting held on 21 May between a Bangladesh delegation led by Finance and Planning Minister Amir Khasru Mahmud Chowdhury and an IMF team headed by Deputy Managing Director Nigel Clarke.
According to a Finance Ministry press release issued on Monday, the discussions focused on Bangladesh’s macroeconomic outlook, progress under the current IMF-supported programmes, and the future direction of cooperation between Dhaka and the Washington-based lender.
During the meeting, the finance minister referred to earlier discussions at the IMF-World Bank Annual Meetings in Washington DC and said the government had since carried out an internal review of the proposed reform measures.
While reaffirming the administration’s commitment to preserving macroeconomic stability and implementing structural reforms, the minister argued that the current IMF programme had been formulated under significantly different economic and political circumstances.
He noted that changing domestic realities, political economy considerations and growing global uncertainties had made the implementation of several reform measures increasingly difficult.
According to the press release, the government is not seeking to abandon reforms altogether but instead aims to adopt a more practical and phased reform strategy aligned with Bangladesh’s present economic conditions and implementation capacity.
Against this backdrop, both sides discussed the possibility of designing a new IMF credit arrangement tailored to the priorities of the current government.
The proposed framework would reportedly involve a three-year programme featuring realistic targets, phased implementation and reforms prioritised according to economic necessity and administrative feasibility.
Nigel Clarke welcomed Bangladesh’s revised reform approach and its proposal for a fresh financing facility, expressing optimism about maintaining constructive engagement with Dhaka.
Both parties agreed on the need for a realistic and implementation-focused programme and decided to accelerate preparatory work for the proposed arrangement.
Officials familiar with the discussions said the government’s decision to move away from the current arrangement follows prolonged disagreements over several IMF policy conditions.
The IMF has reportedly urged Bangladesh to introduce a uniform 15 per cent value-added tax (VAT) rate, remove certain tax exemptions and gradually replace broad-based subsidies on electricity and fertiliser with targeted cash support mechanisms.
In addition, international development partners have raised concerns regarding the government’s recent amendment to the Bank Resolution Act, 2026, particularly provisions related to the bank resolution framework that some observers believe could weaken transparency and oversight standards.
The finance minister has maintained that the elected government cannot accept conditions imposed by development partners if they are viewed as conflicting with public interests or inconsistent with the BNP administration’s electoral commitments.
Despite the differences, senior financial officials stressed that maintaining an IMF-supported programme remains strategically important for Bangladesh, as such arrangements are widely regarded as a signal of policy credibility and macroeconomic discipline.
Officials noted that continued IMF engagement could also help unlock an estimated $3 billion to $4 billion annually in parallel budgetary support from development partners including the World Bank and the Asian Development Bank (ADB).
An IMF delegation is expected to visit Dhaka in July or August to begin negotiations on the size, timeline and detailed conditions of the proposed alternative financing arrangement.
