Discussions on Bangladesh’s loan programme with the International Monetary Fund (IMF) are set to resume. As part of the process, an IMF delegation is scheduled to visit Dhaka after Eid.
The team will be led by Krishna Srinivasan, director of the IMF’s Asia and Pacific Department. The delegation is expected to meet prime minister Tarique Rahman, on 24 or 25 March, according to sources at the Finance Division of the Ministry of Finance.
Experts consider Srinivasan’s visit highly significant. They say the loan programme should remain in place under the current circumstances, as Bangladesh needs budget support at this time.
Before the IMF delegation’s arrival, the organisation’s resident representative in Dhaka Maxym Kryshko, paid a courtesy call on finance minister Amir Khasru Mahmud Chowdhury at the Secretariat on Sunday.
Earlier, on 13 March, he also met Mostaqur Rahman, governor of Bangladesh Bank. Bangladesh’s USD 4.7 billion loan programme with the IMF began on 30 January, 2023.
During the tenure of the interim government led by Muhammad Yunus, the programme was expanded by USD 800 million in June last year, increasing the total size to USD 5.5 billion.
So far, Bangladesh has received USD 3.64 billion in five instalments, leaving USD 1.86 billion yet to be disbursed. The sixth tranche, which was expected in December, has not been released.
Sources at the Finance Division and Bangladesh Bank said the meeting with the prime minister will focus on continuing the loan programme and reviewing progress on reform measures tied to it.
Following the meeting with the prime minister, the IMF delegation is also expected to hold discussions with the finance minister, officials of the Finance Division, Bangladesh Bank, the National Board of Revenue (NBR), as well as the power division and the energy and mineral resources division.
Earlier, another IMF mission visited Dhaka for two weeks in October–November last year. During that visit, the team also held meetings with several political parties, including the Bangladesh Nationalist Party (BNP) and Bangladesh Jamaat-e-Islami.
That mission was led by Chris Papageorgiou, head of Development Macroeconomics at the IMF’s research department. At a press conference, Papageorgiou said it would be reasonable to allow the newly elected government, which was to assume office in February, to provide its views before the next tranche was released.
The annual meetings of the IMF and the World Bank were held in Washington, DC from 13 to 17 October last year. After the conference, then finance adviser Salehuddin Ahmed and then Bangladesh Bank governor Ahsan H Mansur said the next tranche would be released after discussions with the elected government.
Speaking to Prothom Alo, former finance adviser Salehuddin Ahmed said the major conditions under the loan programme had already been met and some ordinances had been issued.
He said the elected government could convert those ordinances into laws—possibly with modifications—and the IMF would likely not object. He added that the programme should continue rather than be abandoned, as the government currently needs significant cash support.
Bangladesh ranks among the lowest in the world in tax collection as a share of GDP. Many individuals and institutions in the country do not pay taxes properly.
Officials at the Finance Division say the VAT rate should be reduced only for essential goods and services, tax exemptions should be withdrawn, and minimum turnover taxes for all businesses should be increased.
They warn that without increasing revenue collection, the government will struggle to invest in infrastructure and social protection programmes, maintain economic stability, and avoid the risk of falling into a low-growth trap.
The spring meetings of the IMF and World Bank will be held in Washington from 13 to 18 April.
A Bangladeshi delegation led by finance minister Amir Khasru Mahmud Chowdhury is expected to attend. The delegation will also include Bangladesh Bank governor Mostaqur Rahman and finance secretary Khairuzzaman Mozumder, among others.
Former World Bank Dhaka office chief economist Zahid Hussain said, “The upcoming meeting between the prime minister and the IMF would be highly significant given the new government and the challenging global economic situation. I believe both sides would likely want the loan programme to continue, and Bangladesh might even seek additional time and funding under the same programme.”
Zahid Hussain noted that while Bangladesh has met the foreign exchange reserve conditions, it has failed to meet the revenue targets set under the programme.
The upcoming discussions will review what the programme required, how far Bangladesh has progressed, and where the process has stalled, he said, adding that a decision is expected after the talks.