Discussions on approving a new loan program for Bangladesh will continue with the International Monetary Fund (IMF) over the next few months.
Consecutive rounds of discussions will take place between both parties regarding the potential loan amount, the scope of the program, and the government's implementable reform commitments in exchange.
The IMF delegation announced this in a press release on Thursday (July 16) following the conclusion of its five-day visit to Dhaka.
The organization stated that the current economy of Bangladesh still faces major challenges, such as revenue deficits, weaknesses in the banking sector, and high inflation.
If these issues are not effectively resolved, the country's medium-term economic growth could fall below 3%.
However, if revenue collection is increased and effective reforms are implemented in the banking sector, the economy's prospects will improve significantly.
At the government's request, a 12-member IMF delegation arrived in Dhaka on July 12 to discuss a new IMF-supported economic reform program.
On the final day of the visit, the delegation held a concluding meeting with Finance Minister Amir Khasru Mahmud Chowdhury.
During the meeting, detailed discussions were held on the country's recent economic situation, the state of the financial sector, and the government's reform plans.
Previously, during the Awami League government's tenure, the $4.7 billion IMF loan program was suspended by mutual consent after the release of five tranches.
Now, in response to the request of the new government, discussions have commenced for a fresh loan program.
The visiting IMF mission in Dhaka was led by IMF official Ivo Krznar.
In a statement issued at the end of the visit, he said that constructive discussions were held with the Bangladeshi authorities regarding the recent economic situation, policy priorities, and the government's reform plans.
Discussions will now continue over the next few months regarding the size, scope, and required reform commitments of the potential new program.
According to the IMF’s assessment, the economic growth of Bangladesh under the current circumstances could decline to approximately 3.5%. If revenue collection remains weak and the banking sector's problems persist, there is a risk that medium-term growth could fall below 3%.
Conversely, the government has set a growth target of 6.5% in the budget for the current FY27.
The IMF stated that the ongoing war in the Middle East has driven up the prices of fuel and various commodities in the international market. Concurrently, disruptions in the supply chain have further escalated inflationary pressures.
As a result, the government's subsidy expenditures have increased, putting additional pressure on its limited revenue capacity.
The balance of payments is also under strain due to rising import costs, although remittance inflows remain strong.
According to the IMF, revenue collection must be significantly increased to sustainably expand social safety net programs and development expenditures.
Alongside this, rational reforms in the subsidy system are necessary.
However, to ensure these reforms do not adversely affect low-income populations, targeted social protection programs must be strengthened.
The IMF added that maintaining a tight monetary policy and a prudent fiscal policy is essential for controlling inflation and rebuilding foreign exchange reserves.
The statement noted that the consistent implementation of the "crawling peg" exchange rate system, introduced in 2025, will make the exchange rate more flexible and maintain external sector stability.
At the same time, the IMF emphasized the importance of advancing the restructuring of the banking sector under a credible and comprehensive strategy.