Ahead of formal discussions on a new loan programme, the International Monetary Fund (IMF) conducted a five-day fact-finding mission to assess Bangladesh’s capacity and readiness to implement economic reforms.
Although Bangladesh has requested nearly $4.5 billion in new loans, the multinational lender has not yet held talks on the loan size or terms. Instead, the mission focused on evaluating the government’s reform priorities, institutional capacity to implement them, and policy readiness. Future steps on the new programme will depend on this assessment, according to officials and an IMF statement.
In a statement issued late on Thursday, the Washington-based agency said the purpose of the 12–16 July mission was to review Bangladesh’s recent economic and financial developments, and to gain insight into the government’s policy plans, reform priorities, and institutional capacity to implement them. The IMF also noted that discussions on the potential design of a new programme and associated reform commitments will take place in the coming months.
Officials told TIMES of Bangladesh that no loan agreement or reform conditions were finalised during the mission; the IMF primarily sought to determine the government’s readiness to implement a new programme.
On 1 June, Bangladesh exited from its existing $5.5 billion IMF programme and requested talks on a new one. Following this, a 12-member IMF mission visited Dhaka. The IMF said the findings from the visit would inform its internal assessment.
IMF mission chief Ivo Krznar said in a press release that Bangladesh still faces significant challenges in revenue, financial sector management, and inflation. Rising global commodity prices and import costs due to the conflict in the Middle East, along with higher subsidy pressures, have further constrained the government’s limited fiscal space. Stress in the banking sector also remains elevated.
In this context, the IMF highlighted that any potential new programme would be based on four key reforms: strengthening fiscal capacity through higher revenue, rationalising subsidies, making the exchange rate more flexible, and addressing weaknesses in the banking sector.
Officials involved said the IMF wants assurance that the government has clear plans and effective capacity to implement these reforms before negotiations on a new loan can proceed.
Among the four reforms, the banking sector received the greatest emphasis. The IMF stated that bank restructuring must be carried out on a credible and coordinated basis. Weaknesses across the sector must be addressed in a manner that maintains financial stability and strengthens the investment climate. In other words, the IMF views bank reform not merely as a financial sector issue, but as a prerequisite for future economic growth and investment recovery.
The IMF issued similar guidance regarding revenue policies, stressing that increasing revenue and rationalising subsidies is essential to create fiscal space for social and development spending. Targeted social protection programmes must also be strengthened to ensure the burden of reforms does not fall on low-income populations.
The agency further recommended strict monetary policy and prudent revenue measures to control inflation and rebuild foreign exchange reserves. It emphasised the continued implementation of the crawling peg exchange rate system, introduced in 2025, to ensure greater flexibility and stability in the external sector.
Alongside the assessment, the IMF issued a clear warning: Bangladesh’s economic growth could fall to 3.5 per cent in FY27. Without effective implementation of reforms in revenue collection, fiscal capacity, and banking sector weaknesses, growth could drop below 3 per cent in the medium term. Banking sector stress, fiscal constraints, and external sector risks could further amplify downward pressures on the economy.
After a meeting with mission members on Thursday, Finance Minister Amir Khosru Mahmud Chowdhury told reporters that under any potential new programme, reforms would be implemented gradually in line with the elected government’s priorities. He added that many reforms have already been executed, and the remaining measures will be implemented in due course.
A senior official involved in the discussions, speaking on condition of anonymity, said the IMF first wants to be convinced that the government possesses the policy framework, institutional capacity, and political commitment to implement promised reforms in banking, revenue, subsidies, and exchange rates. The speed of negotiations, loan conditions, and ultimately the loan amount will be determined based on this assessment.
