Key facts
- The IMF and Bangladesh have agreed on a broad framework for a new loan program.
- IMF staff project Bangladesh's economic growth will slow to 3.5% in fiscal 2027 and below 3% medium-term.
- Bangladesh is seeking a replacement for its $5.5 billion IMF bailout program.
- The country faces significant fiscal, financial, and inflationary pressures, compounded by the Middle East conflict.
- The IMF recommended stronger revenue mobilization, subsidy rationalization, tight monetary, and prudent fiscal policies.
The International Monetary Fund (IMF) has concluded a visit to Bangladesh and indicated that discussions on the parameters of a new loan arrangement will take place in the coming months. IMF staff project Bangladesh's economic growth will moderate to 3.5% in fiscal year 2027 and further weaken to below 3% over the medium term.
Bangladesh is seeking a replacement for its $5.5 billion IMF bailout program after the current government, which took office in February, opted to exit the earlier arrangement, citing misaligned conditions. Finance Minister Amir Khosru Mahmud Chowdhury stated that a broad framework for a new program has been agreed upon, with reforms to be implemented in phases.
The IMF noted that Bangladesh continues to face significant fiscal, financial, and inflationary pressures, exacerbated by the conflict in the Middle East, higher global commodity prices, and supply disruptions. These factors have renewed inflationary pressures, increased import and subsidy costs, and added to economic strains, while the banking sector remains under elevated stress.
To address these challenges, the IMF recommended stronger revenue mobilization and subsidy rationalization to create fiscal space for priority spending. It also advised maintaining tight monetary and prudent fiscal policies to reduce inflation and rebuild foreign exchange reserves. The lender further suggested consistent implementation of the crawling peg exchange-rate regime adopted in 2025 to enhance flexibility and support external stability, alongside a credible strategy for banking-sector restructuring.
Bangladesh initially entered the IMF program in 2023 amid a severe foreign exchange crisis, receiving approximately $3.8 billion of the approved funds to date. The government is also pursuing financing from the World Bank and the Asian Development Bank as it grapples with persistent inflation, slowing growth, dwindling foreign exchange reserves, and increased energy import costs linked to the Middle East conflict.