IMF approves $1.34b loan for Bangladesh

The International Monetary Fund (IMF) Executive Board has completed the combined third and fourth reviews of Bangladesh’s economic programmes under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF), approving a total immediate disbursement of approximately US$1.34 billion.

This includes US$884 million under the ECF/EFF arrangements and US$453 million under the RSF, aimed at supporting Bangladesh’s efforts to build resilience against climate change.

Despite operating in a challenging political and economic environment, Bangladesh’s program performance has been broadly satisfactory. The IMF emphasized that advancing reforms is crucial to restoring macroeconomic stability, safeguarding vulnerable groups, and promoting inclusive, sustainable growth.

IMF Deputy Managing Director and Acting Chair, Nigel Clarke, remarked, “Bangladesh’s economy continues to face multiple macroeconomic challenges. Nonetheless, program implementation remains broadly on track, with the authorities committed to necessary policy actions and reforms.”

He added that near-term priorities should include rebuilding external buffers and lowering inflation. The recent introduction of a new exchange rate regime and revenue-enhancing measures in the FY2026 budget were highlighted as positive developments.

The IMF further called for a balanced policy approach anchored in tight monetary policy, enhanced exchange rate flexibility, and revenue-based fiscal consolidation. Improving tax revenue collection and reducing subsidies are vital to create fiscal space for social, development, and climate initiatives.

Clarke also stressed the importance of strengthening financial sector stability through comprehensive reforms and swift implementation of new banking regulations to safeguard depositors.

Looking ahead, the IMF identified structural reforms—such as export diversification, attracting foreign direct investment, improving governance, and enhancing data quality—as essential for Bangladesh’s ambition to reach upper middle-income status.

The RSF support will also assist in bolstering institutional capacity, policy coordination, and climate finance mobilization to enhance the country’s resilience to natural disasters.