Bangladesh Secures Major IMF Support Amid Economic and Political Challenges
The International Monetary Fund (IMF) has approved the combined third and fourth disbursements of Bangladesh’s $4.7 billion loan program, amounting to $1.3 billion. The decision follows a review of the country’s Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) arrangements. Additionally, the IMF board approved an increase of SDR 567.19 million for the ECF/EFF arrangements and extended the program by six months to help stabilize the economy and support reforms.
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Bangladesh’s macroeconomic situation has remained fragile since the 2024 political uprising, which saw the ouster of the previous government. Although an interim administration has helped restore some political stability, the country faces rising inflation, banking sector stress, trade restrictions, and tighter monetary policies. The IMF praised Bangladesh’s efforts to maintain program performance under difficult conditions, welcoming recent reforms in exchange rate flexibility and tax revenue enhancement.
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The IMF urged Bangladesh to focus on fiscal consolidation by cutting subsidies, improving public financial management, and raising tax revenues. It also stressed the importance of financial sector stability through legal reforms for bank restructuring and safeguarding small depositors. Long-term recommendations include diversifying exports, attracting foreign investment, and strengthening climate resilience initiatives, crucial for Bangladesh’s ambitions of attaining upper-middle-income status in the coming years.
