The International Monetary Fund (IMF) is planning a staff visit to Dhaka after Bangladesh requested a new support programme for its economic reforms, marking the next stage in negotiations over a successor arrangement to the country’s existing IMF-backed facility.
IMF Mission Chief for Bangladesh Ivo Krznar said in a statement on Wednesday that Fund staff are engaging with Bangladeshi authorities on their reform agenda and policy priorities as part of the IMF’s consideration of possible next steps.
However, the timeline of the visit was yet to be shared.
He said the current arrangements under the Extended Credit Facility, Extended Fund Facility and Resilience and Sustainability Facility have provided an important policy anchor during a challenging period.
However, the macroeconomic and political context has changed substantially since the programme was approved in January 2023.
The IMF identified weaknesses in the banking sector and low revenue mobilisation as key challenges, emphasising the need for a renewed and sustained reform effort.
“The authorities’ request for a successor arrangement provides an opportunity to agree on a potential programme that reflects current challenges while incorporating the new authorities’ objectives and priorities,” Krznar said.
Any new arrangement would be based on Bangladesh’s balance-of-payments needs, strong policy commitments anchored by a credible reform agenda and approval by the IMF Executive Board, he added.
Planning is underway for an IMF staff visit to Bangladesh to review recent economic developments, engage with the authorities on policy priorities and assess reform challenges.
Discussions on the parameters of a potential IMF-supported programme, including its size and related reform commitments, will take place during a subsequent programme negotiation mission.
“The IMF remains a committed partner to Bangladesh in its efforts to secure lasting macroeconomic and financial stability, strengthen resilience and support strong, inclusive growth,” Krznar said.
He added that the Fund looks forward to constructive engagement with the authorities and other stakeholders as the process moves forward.
The IMF statement comes days after the finance ministry announced that Bangladesh would exit the existing IMF programme negotiated under the previous administration and seek a new credit facility with a three-year implementation window for priority reforms.
According to the ministry, the policy shift was formalised during a virtual meeting on 21 May between Finance Minister Amir Khosru Mahmud Chowdhury and IMF Deputy Managing Director Nigel Clarke, where discussions covered Bangladesh’s macroeconomic stability, ongoing IMF programmes and future cooperation.
The government said the previous programme had been designed under a different economic and policy environment and that domestic and global developments had since complicated implementation of agreed reforms.
Finance Minister Amir Khosru Mahmud Chowdhury told IMF officials that the government remained committed to reforms but wanted to sequence measures more realistically over three years in line with current economic conditions and national priorities.
Officials indicated the proposed programme could be worth $4-5 billion.
Bangladesh sought IMF assistance in July 2022 to support balance-of-payments stability and budget financing. The previous administration initially secured approval for $4.7 billion under three facilities, later expanded to $5.5 billion.
Of that amount, $3.64 billion was disbursed in five tranches. Two tranches worth $1.86 billion remain undisbursed after negotiations stalled amid disagreements over economic and banking-sector reforms.
Officials said differences remain over banking-sector restructuring and revenue reforms.
They added that a functioning IMF programme is important for unlocking parallel budget support from other development partners, including the World Bank and Asian Development Bank.
