The International Monetary Fund (IMF) has advised Bangladesh to keep monetary policy strict to curb inflation, fortify its vulnerable banking system, and boost tax collection as talks proceed regarding a fresh IMF-backed package.
"Maintaining a tight monetary stance in Bangladesh is essential to counter inflationary pressures, which climbed to 8% in September," stated Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, during a news conference on the regional economic outlook.
She noted that Bangladesh faces ongoing hurdles across fiscal, financial, and inflationary domains, demanding structural measures alongside monetary restraint.
The IMF official highlighted financial sector reinforcement and revenue generation as urgent goals, pointing out that Bangladesh's tax-to-GDP ratio has been declining and ranks among the lowest globally.
"Comprehensive measures are required on the revenue side. Mobilizing resources is crucial for funding development projects and strengthening the broader economy and banking system," she emphasized.
Jain-Chandra mentioned that the IMF has been in dialogue with Bangladeshi officials since the nation requested a new assistance plan in May, after choosing not to draw further funds under its prior agreement.
A mission from the IMF visited Bangladesh in July to evaluate proposed policy changes, which she noted align with recommendations from the Fund’s Article IV consultation conducted earlier this year.
An Article IV consultation represents the IMF’s periodic review of a nation's macroeconomic health and policy framework, generally providing guidance on monetary, fiscal, and structural adjustments to mitigate economic risks.
Negotiations have remained ongoing following the July mission, she added.
"We maintain active engagement with the authorities and remain committed to assisting Bangladesh as it implements these critical reforms," she remarked.
Bangladesh aims to tackle stubborn inflation, banking sector vulnerabilities, and weak tax collection through a new arrangement with the IMF, though specific terms and schedules for the proposed package were not revealed at the press event.
