The International Monetary Fund has said that the overall loan amount of $4.7 billion has been raised to $5.5 billion under its current loan programme for Bangladesh.
The progarmme period has also been extended by six months to January 27, 2027 from July 2026, following requests from Dhaka, said the IMF in its new report on Bangladesh issued on June 26 from Washington.
On June 10, interim government finance adviser Salehuddin Ahmed in a聽 letter to the IMF asked for an extra $800 million and an extra six-month time in its loan programme for Bangladesh against the backdrop of new vulnerabilities with the introduction of the new United States tariff regime and disruption in development assistance for the Rohingya refugees.
The IMF observed that massive protests led to former prime minister Sheikh Hasina fleeing the country, the formation of an interim government, and the replacement of the Bangladesh Bank governor.
This period of intense turbulence disrupted economic activities and heightened investor uncertainties exacerbating tax revenue collection and spending pressures.
鈥楾he situation has stabilized somewhat; however, political tensions 鈥攑articularly around the timing of upcoming elections 鈥� continue to linger,鈥� said the IMF.
On June 23, the IMF approved the release of about $1.3 billion to Bangladesh under the current loan package.
The approval will pave the way for the release of the fourth and fifth trances by Monday.聽
The multilateral lender had disbursed $2.3 billion in three tranches until June 2024 under the loan programme initiated by the ousted Awami League government.
In May, the disbursement of the two tranches at once was agreed at a staff-level review by the IMF mission in Dhaka following reforms brought about by Bangladesh in the areas of revenue and exchange rate.
The interim government has introduced floating exchange rate and created Revenue the Policy Division and Revenue Management Division by splitting the National Board of Revenue.
Finance adviser Salehuddin Ahmed had expected the availability of an extra $3.5 billion, including the IMF鈥檚 $1.3 billion, as budget support from the multilateral and bilateral lenders before the end of the 2024-25 financial year on June 30.
The IMF loan will help strengthen the foreign exchange reserves which are hovering over $20 billion as per BPM6, the sixth edition of the Balance of Payments and International Investment Position Manual.
The IMF said that Bangladesh鈥檚 economy continued to navigate multiple macroeconomic challenges.
Despite a difficult environment, it said, programme performance has remained broadly on track, and the authorities are committed to implementing necessary policy actions and reforms.
鈥楴ear-term policies should prioritize rebuilding external resilience and reducing inflation,鈥� said the IMF, adding that a balanced policy mix 鈥攁nchored in maintaining a tight monetary policy stance, greater exchange rate flexibility, and revenue-based fiscal consolidation 鈥攚ould support efforts to restore both external and internal balances.
Efforts to raise tax revenues and rationalise expenditures 鈥� including through subsidy reduction 鈥� are critical for creating the fiscal space needed to strengthen social, development, and climate initiatives, said the IMF.
