International Monetary Fund (IMF) will release $1.3 billion to Bangladesh in June, after a currency exchange reforms breakthrough and the third review of a $4.7 billion loan program, the finance ministry said on Wednesday.
The installment comprises the fourth and fifth tranches of the IMF program, which were held up due to differing opinions on exchange rate flexibility. The IMF had demanded a crawling peg mechanism so that the Bangladeshi taka could appreciate or depreciate gradually based on market forces.
Following intensive talks in Dhaka and at the IMF and World Bank Spring Meetings in Washington, both sides agreed on reform frameworks for revenue management, fiscal policy, and foreign exchange rules.
The IMF confirmed a staff-level agreement for the combined third and fourth reviews under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility. After approval by the IMF Executive Board and completion of necessary steps, Bangladesh will obtain Special Drawing Rights (SDR) 983.8 million (approximately $1.3 billion). In addition, the nation has applied for an additional SDR 567.2 million (approx. $762 million) in order to accommodate increasing external financing requirements and shore up its economy.
The authorities have committed reforms to reinforce monetary and fiscal policy, overhaul the tax system, and enhance the banking sector’s governance. One of the major steps is to abolish the National Board of Revenue (NBR) and instead create two finance ministry units, one for taxation policy and another for collection and administration, to enhance transparency and efficiency.
Bangladesh, which approached the IMF in 2023 for support following pressure on foreign reserves in the face of global commodity price shocks, has already received $2.3 billion under the first three tranches. An additional $2 billion budget support from development partners is expected by the interim government headed by Nobel laureate Muhammad Yunus.
