The government has requested a new financial assistance program from the International Monetary Fund (IMF) to support Bangladesh's ongoing economic reform efforts.
IMF Bangladesh Mission Chief Ivo Krosner said this in a statement released on Wednesday (June 3).
The statement said that as part of considering a possible new program, IMF officials are discussing reform plans and policy priorities with Bangladeshi authorities.
Ivo Krosner said that the ongoing programs under the Extended Credit Facility (ECF), Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), approved in January 2023, have served as an important policy foundation for Bangladesh during a difficult period.
However, there have been significant changes in the country's macroeconomic and political context. As a result, deeper and more effective reform initiatives are needed in light of the new reality.
The IMF statement cited the weakness of the banking sector and low revenue collection as the main structural challenges of the Bangladesh economy. It emphasized the need for a long-term reform program to address these problems.
The organization said that Bangladesh's request for a new program has created an opportunity for the IMF and the government to create a new framework that reflects current economic realities and incorporates the government's priority reform program.
However, it was noted that the approval of a potential new program will depend on the country's external financing needs, strong policy commitments, a credible reform plan, and approval by the IMF's Executive Board.
Meanwhile, the organization said that an IMF staff mission will visit Dhaka soon to review the recent economic situation in Bangladesh, discuss with policymakers, and assess future economic challenges.
After that visit, formal discussions will begin on the size, financing amount, and reform conditions of a potential new program.
The IMF reiterated its commitment to continue its cooperation with Bangladesh, saying that it will support Bangladesh in achieving sustainable macroeconomic stability, increasing economic capacity, and ensuring inclusive growth.
According to analysts, the IMF's new support program initiative on the one hand and efforts to attract Japanese investment on the other can play an important role in stabilizing Bangladesh's economy and ensuring long-term growth.