The International Monetary Fund (IMF) Executive Board has completed the combined Third and Fourth Reviews of Bangladesh's arrangements under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF). This completion allows Bangladesh to withdraw approximately US$884 million under the ECF/EFF and US$453 million under the RSF. The IMF also approved an augmentation of SDR 567.19 million for these arrangements and extended them by six months.
Additionally, the IMF Executive Board modified performance criteria and granted a waiver for non-observance related to exchange restrictions, citing corrective measures taken by Bangladesh.
Bangladesh's financial arrangements with the IMF were initially approved on January 30, 2023, amounting to SDR 2.5 billion under ECF/EFF and SDR 1 billion under RSF. With this augmentation, total assistance reaches about US$4.1 billion under ECF/EFF and about US$1.4 billion under RSF.
Since a popular uprising in 2024 led to government changes, Bangladesh faces increased macroeconomic challenges. Despite political uncertainty and economic stress, program performance remains broadly satisfactory as authorities commit to reforms like enhancing exchange rate flexibility and boosting tax revenues.
Deputy Managing Director Nigel Clarke commented on Bangladesh's situation: "Despite a difficult environment, program performance has remained broadly on track... Near-term policies should prioritize rebuilding external resilience and reducing inflation."
Clarke highlighted efforts needed in fiscal consolidation: "Efforts to raise tax revenues and rationalize expenditures—including through subsidy reduction—are critical for creating the fiscal space needed..."
He emphasized financial sector stability: "Financial sector policy should prioritize safeguarding stability... Developing a comprehensive strategy is an immediate priority..."
Clarke concluded with structural reform priorities: "Sustained structural reforms are essential for Bangladesh to achieve its goal of attaining upper middle-income status."
Bangladesh's macroeconomic indicators show challenges such as reduced GDP growth projections from 7.1% in FY22 to 3.8% in FY25 but anticipate recovery by FY27 with projected growth at 6.2%. Inflation rates remain high but are expected to decrease gradually.
The IMF-supported programs aim to restore macroeconomic stability while promoting inclusive growth and protecting vulnerable populations amid challenging conditions.