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IMF to Disburse $645M Loan to Bangladesh by Feb 10
Bangladesh is set to receive $645 million as the fourth tranche of its $4.7 billion loan from the International Monetary Fund (IMF) on February 10, provided it meets specific conditions, according to Chris Papageorgiou, the IMF staff team leader.
Papageorgiou made the announcement during a press briefing at the Finance Division conference room on December 19. He explained that the IMF board will review the fourth tranche on February 5, with disbursement scheduled shortly thereafter, pending the fulfillment of agreed-upon reforms.
The IMF's mission to Bangladesh, which arrived on December 3, had previously indicated that the multilateral lender is prepared to release the additional funds under stringent conditions, including a recommendation to raise electricity prices. However, the Bangladeshi government has expressed reluctance to implement price hikes before June 2024 due to the ongoing inflationary pressures on the population.
In a press release issued on December 18, the IMF highlighted the challenges facing Bangladesh’s economy, noting rising external financing needs and persistent economic pressures. "To address these issues, the authorities have requested an augmentation of IMF financial assistance by $750 million to ensure macroeconomic stability and strengthen resilience to external shocks," the release stated.
The Bangladeshi authorities have committed to implementing revenue-based fiscal consolidation, tightening monetary policies to curb inflation, and fully adopting exchange rate reforms to improve flexibility, the IMF noted.
The IMF also revised its economic growth forecast for Bangladesh, lowering the projection for fiscal year 2024-25 (FY25) to 3.8%, down from an earlier estimate of 4.5% made in October.
As part of the conditions tied to the $4.7 billion loan, the IMF is pushing for an increase in Bangladesh's tax-to-GDP ratio, which stood at 7.5% in FY24. The goal is to raise this ratio to 7.9% by FY25, requiring the country to collect at least Tk 4.6 lakh crore—an increase of 21% from the previous year’s revenue.
However, data from the National Board of Revenue (NBR) reveals that revenue collections in the first four months of FY25 have fallen short of target by approximately Tk 31,000 crore, reflecting a slight decline of less than 1% compared to the same period last year.