After Pakistan, IMF To Release $1.3 Billion Aid To Bangladesh

The International Monetary Fund (IMF) is set to disburse $1.3 billion to Bangladesh in June, following the completion of the fourth review of its $4.7 billion loan agreement, as well as a significant breakthrough in discussions over exchange rate reforms, the country's finance ministry confirmed.

The disbursement, which includes both the fourth and fifth instalments, had been delayed due to the IMF's insistence on increased exchange rate flexibility, particularly through the introduction of a crawling peg system.

Photo Credit: PTI

The fourth review, held in Dhaka in April, was followed by further negotiations during the Bank-Fund Spring Meetings in Washington DC.

These talks focused on key reforms in areas such as revenue collection, fiscal policy, and the foreign exchange framework.

"After thoroughly reviewing all matters ... both sides have come to an agreement on the frameworks for revenue management, currency exchange, and other reforms," read a statement from the finance ministry issued on Wednesday.

With a staff-level agreement now reached on the fourth review, the IMF is expected to release the combined $1.3 billion in June, the statement added.

As part of efforts to fulfil IMF conditions, the government has also dismantled the National Board of Revenue (NBR), replacing it with two separate divisions under the finance ministry. One will oversee tax policy, while the other will be responsible for tax collection and administration - a move aimed at improving efficiency, transparency, and accountability.

In addition to the IMF funding, the government anticipates receiving a further $2 billion in budgetary support from development partners.

These include the World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Japan, and the OPEC Fund for International Development.

Bangladesh approached the IMF in 2023 for a $4.7 billion bailout after its foreign currency reserves came under pressure due to a spike in global commodity prices following Russia's invasion of Ukraine, which strained its ability to finance essential imports such as fuel and gas.

The country has already received $2.3 billion across the first three instalments of the programme.

A caretaker government, headed by Nobel Peace Prize winner Muhammad Yunus, assumed power in August following the removal of former Prime Minister Sheikh Hasina after a wave of violent protests.