The International Monetary Fund (IMF) has outlined a set of conditions for Bangladesh to receive the next tranche of its ongoing loan package, including keeping the policy rate at 10% until inflation falls to 5%, setting deadlines for reducing non-performing loans, and tightening oversight of the banking sector.
IMF officials raised the issues during meetings with the government and the central bank last week in Dhaka.
Both sides, however, described the meetings as preliminary discussions, with final decisions expected after the World Bank Group’s spring meetings in Washington from 13 to 18 April.
On Tuesday, IMF Director for Asia and the Pacific Krishna Srinivasan met Bangladesh Bank Governor Md Mostaqur Rahman at the central bank’s headquarters.
The following day, a team led by IMF Mission Chief Chris Papageorgiou held further discussions with the governor on the roadmap’s framework and implementation.
Several Bangladesh Bank officials who attended the meetings told TIMES of Bangladesh that the IMF is seeking a new roadmap to understand how the reform programme will proceed under the newly elected government. As part of this roadmap, several policy issues were discussed.
Among them, the IMF proposed maintaining the policy rate at 10% until inflation is brought under control. Officials said the international agency also emphasised greater transparency in foreign exchange market interventions, requiring the government to keep the IMF informed of dollar purchases from the market.
Discussions also focused on strengthening governance in the banking sector, including amending the Bank Companies Act to give Bangladesh Bank greater authority in appointing directors and managing directors of state-owned banks, as well as updating the Bank Resolution Ordinance for consolidation of weak banks.
On non-performing loans, the IMF is seeking a structured plan, with officials noting discussions included setting timelines for frequent rescheduling and reducing bank-level bad loans.
A senior Bangladesh Bank official, speaking to TIMES on condition of anonymity, said the central bank shares the IMF’s view that the policy rate should not be reduced until inflation is under control.
“There is no disagreement between the IMF’s request and Bangladesh Bank’s stance,” the official said.
The official described the IMF delegation’s visit as purely preliminary. “The team mainly delivered a message to the government and sought to understand its plans. The main discussions will take place in Washington at the spring meeting in April. The outcome of Bangladesh’s loan programme will be decided based on that,” he added.
Bangladesh Bank Assistant Spokesperson Mohammad Shahriar Siddique said the IMF has viewed the country’s reserve position, exchange rate, and progress on financial sector reforms positively. “However, they have requested a time-bound roadmap,” he said.
The discussions come amid rising global energy market volatility, which is creating fresh economic pressures. Ministry of Finance sources said the government is seeking several hundred million dollars in foreign financing to secure oil and LNG imports, amid tensions linked to the Middle East conflict.
Rashed Al Mahmud Titumir, economic and planning adviser to the prime minister, recently told Reuters that talks are ongoing with development partners including the Asian Development Bank, World Bank, International Islamic Trade Finance Corporation, and Asian Infrastructure Investment Bank, with positive indications emerging.
He said Bangladesh could receive nearly $1.3 billion from the IMF under the existing programme, along with an additional $250-500 million and around $500 million in budget support from the Asian Development Bank.
Bangladesh began a $4.7 billion IMF loan programme in 2023, later expanded to $5.5 billion. The country has received $3.64 billion in five tranches, with $1.86 billion remaining.
The sixth tranche, originally due in December, was delayed by the IMF until it could be finalised following talks with the new government. A review mission is expected to visit Bangladesh after the April spring meetings, and the release of the next tranche will be decided based on that assessment, officials said.
