The International Monetary Fund (IMF) has identified four critical challenges currently pressuring Bangladesh’s economy—political uncertainty, tighter monetary and fiscal conditions, trade restrictions, and continued instability in the banking sector. Despite these concerns, the IMF has approved the release of $1.37 billion in the fourth and fifth tranches of its ongoing $4.7 billion loan package for the country.
According to a press release, the funds will be deposited into Bangladesh’s account on June 26, following approval by the IMF Executive Board on Monday night. This installment comes amid cautious optimism over recent economic stabilization efforts by the interim government.
The IMF acknowledged that the mass movement in July 2024 that led to a change in government had initially triggered macroeconomic turbulence. Since then, security and political stability have improved, allowing the economy to regain a degree of balance. However, the Fund warns that the road to full recovery remains fraught with risk.
The IMF’s latest economic review commends Bangladesh for meeting its targets under the loan program but emphasizes that further reform is needed. Recent measures—such as implementing a flexible exchange rate system and enhancing tax collection in the 2025–26 budget—are steps in the right direction. However, the IMF is urging the government to reduce subsidies gradually, increase spending efficiency, and expedite banking sector reforms to protect small depositors.
Zahid Hussain, former chief economist at the World Bank’s Dhaka office, echoed the IMF’s concerns, stating that political uncertainty is undeniable, but many of the Fund’s recommendations are pragmatic. These include maintaining tight monetary policy, defending the floating exchange rate, and reducing the fiscal deficit through better revenue mobilization.
The IMF forecasts that Bangladesh’s GDP will grow by only 3.8% in the current fiscal year, but may rise to 5.4% in 2025–26. Inflation is expected to ease from 9.9% this year to 6.2% next year, assuming continued policy tightening and a stable exchange rate.
Beyond short-term fixes, the IMF stresses that long-term, structural reforms are vital for Bangladesh to achieve its ambition of reaching upper-middle-income status. This includes export diversification, greater foreign direct investment, strengthened governance, and more reliable data reporting.
Since the program’s launch in early 2023, Bangladesh has received $2.31 billion across three tranches. The latest disbursement reflects both the IMF’s cautious confidence and a warning that further delays in structural reforms could derail recovery.
As global and domestic challenges persist, the IMF’s message is clear: Bangladesh must remain committed to disciplined policymaking, institutional reform, and fiscal responsibility to safeguard its economic future.
Bd-pratidin English/ Jisan
