Bangladesh faces mounting pressures on both external and internal economic fronts, the IMF says in its latest assessment on the country’s economy and suggests some must-dos for a remedy.
It notes that the macroeconomic challenges have deepened since the popular uprising in the summer of 2024, which led to the ouster of the previous government that had ruled the South Asian country for one and a half decades.
The economic outlook still remains fragile due to persistent political uncertainty, a continued tight policy mix, rising global trade barriers, and growing stress in the banking sector, says the International Monetary Fund (IMF), underscoring the urgency of advancing key reforms to restore stability, protect vulnerable populations, and support inclusive and environmentally sustainable growth.
“Bangladesh’s economy continues to navigate multiple macroeconomic challenges,” said Nigel Clarke, IMF Deputy Managing Director and Acting Chair, as the Fund board just cleared two tranches of loans from an agreed lending package.
“Despite the difficult environment, programme performance has remained broadly on track, and the authorities are committed to implementing the necessary policy actions and reforms.”
The remarks followed the executive board meeting of the IMF which concluded the combined third and fourth reviews under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).
As part of this review, the IMF is expected to disburse US$1.337 billion to Bangladesh within days.
The IMF-supported programmes are designed to safeguard macroeconomic stability, protect the most vulnerable groups, and accelerate reforms that support resilient and inclusive growth, reads the statement issued Tuesday.
“Near-term policies should prioritise rebuilding external resilience and reducing inflation,” the IMF suggests in the statement.
The Fund welcomes the authorities’ recent steps to introduce a new exchange-rate regime and incorporate revenue-enhancing measures into the FY 2025-2026 budget.
A balanced policy mix-anchored in a tight monetary stance, -greater exchange-rate flexibility, and revenue-based fiscal consolidation-is seen as essential to restoring internal and external balances.
The IMF stresses raising tax revenues and rationalising expenditures, including reducing subsidies, to create the fiscal space necessary for strengthening social, development, and climate-related initiatives.
It also calls for continued efforts to cut government subsidies to fiscally sustainable levels and to improve public financial management to enhance spending efficiency and mitigate fiscal risks.
“Financial-sector policy should focus on safeguarding stability and addressing rising vulnerabilities,” the IMF says, urging the government to develop a comprehensive, phased strategy for reforms, and to swiftly implement new legal frameworks that will enable orderly bank restructuring while protecting small depositors.
Sustained structural reforms, it says, are critical for Bangladesh to achieve its goal of becoming an upper-middle-income country.
Key priorities include diversifying exports, attracting higher levels of foreign direct investment, strengthening governance, and improving data quality.
The IMF also emphasises building resilience to natural disasters, noting that the RSF’s focus on strengthening institutions, policy coordination, and improving climate-related spending efficiency remains vital — especially in mobilising climate finance.
The assessment reflects the collective views of the IMF executive directors and has been transmitted to the Bangladeshi authorities.
jasimharoon@yahoo.com