The International Monetary Fund (IMF) is set to release $1.3 billion to Bangladesh in June, following the completion of a fourth review of its $4.7 billion loan program and a significant breakthrough in negotiations regarding exchange rate reforms, according to the finance ministry.
The funds, which encompass both the fourth and fifth tranches, had been delayed due to the IMF’s push for greater flexibility in the exchange rate, particularly the adoption of a crawling peg mechanism.
The fourth review, conducted in Dhaka in April, was followed by further discussions during the Bank-Fund Spring Meetings in Washington D.C. that same month. These discussions centered on critical reforms in revenue management, fiscal policy, and the foreign exchange regime.
“After carefully reviewing all the issues… both parties have agreed on the revenue management, currency exchange rate, and other reform frameworks,” the finance ministry said in a statement on Wednesday.
With a staff-level agreement reached on the fourth review, the IMF is expected to disburse the $1.3 billion earmarked for the fourth and fifth installments together by June.
To meet a key IMF condition, the government has also dissolved the National Board of Revenue (NBR) and replaced it with two divisions under the finance ministry. One division will manage tax policy, while the other will oversee tax collection and administration, with the goal of enhancing efficiency, transparency, and accountability.
In addition to the IMF funds, the government anticipates receiving $2 billion in budget support from development partners, including the World Bank, the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), Japan, and the OPEC Fund for International Development.
Bangladesh initially turned to the IMF in 2023 for the $4.7 billion bailout as its foreign reserves faced pressure from a global surge in commodity prices, triggered by Russia’s invasion of Ukraine, which strained its ability to pay for essential fuel and gas imports. The South Asian nation has already received $2.3 billion across the first three tranches.
