An International Monetary Fund (IMF) team visited Dhaka from April 6–17, 2025, to discuss economic and financial policies related to the IMF's Extended Credit Facility, Extended Fund Facility, and Resilience and Sustainability Facility. The mission was led by Chris Papageorgiou.
Chris Papageorgiou made a statement at the end of the visit, noting that Bangladesh's economy faces challenges amid global uncertainty. He reported a decline in GDP growth to 3.3% year-on-year in the first half of FY25, compared to 5.1% during the same period in FY24. The decline is attributed to economic disruptions, tightening policies, and increased uncertainty affecting investment. He also mentioned that after peaking at 11.7% in July 2024, inflation dropped to 9.4% in March 2025, but still exceeds the Bangladesh Bank's target range of 5–6%.
Papageorgiou stressed the importance of policy tightening to address the external financing gap and reduce inflation. He highlighted the need for fiscal consolidation and tax policy reform, including reducing tax exemptions and simplifying the tax system. The statement advised a careful calibration of the monetary stance and emphasized the importance of exchange rate flexibility.
A comprehensive revenue strategy and expenditure reform were urged to support social spending and infrastructure investment. The statement pointed to the low tax-to-GDP ratio as a reason for necessary tax reforms, aiming for a more equitable and transparent system.
Furthermore, the IMF mission called for financial sector reforms to maintain stability. Legal reforms should align with international standards, and a new framework for bank restructuring is needed. Asset quality reviews, risk-based supervision, and improved governance are critical for confidence and sector health. Structural reforms were emphasized for governance improvement and to attract foreign investment beyond the ready-made garments sector.
The statement also addressed the importance of enhancing resilience to climate change and institutional capacity to meet climate objectives. Climate-responsive fiscal reforms and investments are crucial for maintaining financial sector stability.
Discussions are ongoing to reach a staff-level agreement, aiming for completion during the IMF-World Bank Spring Meetings. Papageorgiou reiterated the IMF's commitment to supporting Bangladesh and expressed gratitude to the Bangladeshi authorities and stakeholders for their hospitality. The team met with various officials, including Finance Advisor S. Ahmed, Special Envoy L. Siddiqui, Bangladesh Bank Governor A. Mansur, and others, as well as representatives from the private sector and international partners.