Bangladesh on track to meet IMF conditions, except revenue collection target

In a bit to disburse the fourth installment from the $4.7 billion loan programme, an International Monetary Fund (IMF) mission led by Chris Papadakis evaluates all 12 conditions set by the financial institute to qualify for the fourth tranche.

The mission said Bangladesh is on track to meet all 12 conditions set by them except the revenue collection target. They, however, hinted that it won’t bring hurdles to get the loan on schedule period.

Following the IMF target government of Bangladesh was supposed to collect Tk 394,530 crore in taxes by June. Finance Division showed that the government collected Tk 369,209 crore by June, meaning it fell Tk 25,321 crore short of the IMF target.

International Monetary Fund (IMF) mission chief Chris Papadakis has completed his visit to Bangladesh to discuss the next tranche of a multi-billion-dollar loan program aimed at bolstering the country’s economy.

This visit comes at a crucial time as Bangladesh continues its efforts to recover from global economic disruptions.

IMF mission led by mission chief Chris Papadakis visited Bangladesh from December 3 to 17 to review the country's performance and compliance with structural reform conditions.

During the visit, he discussed with key Bangladeshi government officials, policymakers, and representatives from the Bangladesh Bank. The main agenda has revolved around assessing the country's progress in meeting the structural reforms and fiscal targets agreed upon under the IMF’s Extended Credit Facility (ECF) program.

Another major condition set by the IMF was to increase the country's net international reserves, which was fulfilled after the IMF lowered the required threshold in May this year upon request by the then government. The initial target was $20.11 billion by June 30. However, the IMF lowered it to $14.79 billion later in May. As of June 30, Bangladesh had $16.7 billion net international reserves.

The ECF program, approved earlier this year, allocated approximately $4.7 billion to Bangladesh to support macroeconomic stability, enhance fiscal resilience, and promote sustainable development. The next disbursement, expected to be around $680 million, is contingent upon the successful implementation of reform measures, including improved tax revenue collection, reduced energy subsidies, and enhanced governance in the financial sector.

During his visit, Papadakis is expected to evaluate the country’s economic performance in light of inflationary pressures, currency volatility, and external debt challenges. He also engaged in discussions about Bangladesh’s long-term development strategy, particularly as the country aims to graduate from its Least Developed Country (LDC) status by 2026.
“The IMF remains committed to supporting Bangladesh in navigating these challenging times and ensuring a path toward sustainable growth,” Papadakis said in a pre-visit statement. “Our collaboration will focus on fostering economic stability and addressing vulnerabilities.”

Economic experts have highlighted the importance of this mission, emphasizing that timely disbursements from the IMF are crucial for maintaining foreign exchange reserves and meeting external obligations. Bangladesh’s reserves have been under pressure in recent months, with the central bank implementing various measures to stabilize the currency and manage imports.

The outcomes of Papadakis’ meetings in Dhaka agreed to be closely watched by international financial institutions and investors, as they signal the government’s commitment to adhering to IMF’s reform guidelines.

The visit underscores the IMF’s pivotal role in supporting economies in the Global South as they navigate the complexities of global economic recovery and resilience-building.

The finance ministry data show that one of the structural reform conditions was the publication of an updated medium-term debt management strategy, covering FY25 to FY27.

In the face of mounting pressure on its foreign reserves, Bangladesh sought IMF assistance at the end of 2022. The multilateral lender approved $4.7 billion in January 2023. Of that, the government has already received $2.3 billion in three tranches.