Bangladesh seeks $4.5b IMF loan in 6 instalments through 2029
Bangladesh hopes to reach an IMF loan agreement by year-end, with revenue mobilisation and banking reforms among the key priorities in ongoing discussions.
Highlights:
- Talks with IMF fruitful: Finance Minister
- Bangladesh hopes to sign IMF loan deal in December
- IMF prioritises revenue mobilisation
- Cenbank to submit plan to restore depositor confidence
- Bad loans climb to 33%, new IMF deal's target undecided
Bangladesh is seeking a $4.5 billion loan from the International Monetary Fund (IMF) in quarterly instalments from December this year through December 2029, with an agreement expected by year-end, a Bangladesh delegation official said.
The loan amount and conditions are expected to be finalised during staff-level negotiations after an IMF mission visits Bangladesh later this month, the official told The Business Standard on condition of anonymity.
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Senior officials of the Bangladesh delegation accompanying Finance Minister Amir Khosru Mahmud Chowdhury expressed optimism about the timeline following what they described as "fruitful discussions" with IMF Deputy Managing Director Nigel Clarke in Bangkok, Thailand yesterday, on the sidelines of the 2026 IMF-World Bank Group Annual Meetings.
Prime Minister's Economic Affairs Adviser Rashed Al Mahmud Titumir did not directly confirm the proposed loan amount or number of instalments, saying these would be determined during staff-level negotiations and at an IMF board meeting.
He said Bangladesh must implement its reform initiatives by 2029, ahead of the 2030 national election, when the government would have to seek a public mandate.
Finance Minister Amir Khosru also said the new IMF programme would come with conditions that Bangladesh would have to fulfil, although some issues could be resolved through discussions and mutual agreement.
Speaking to reporters after meeting Clarke in Bangkok yesterday, he said discussions on the proposed programme were progressing positively. Further talks would determine the conditions and how they would be met, he added.
Revenue mobilisation, banking reforms in focus
The IMF is prioritising increased revenue mobilisation and financial sector reforms in discussions on the proposed loan, which could range from $4.5 billion to $5 billion, according to Sonali Jain-Chandra, deputy director of the IMF's Asia and Pacific Department.
At a press conference on the Asia-Pacific region yesterday, Jain-Chandra said Bangladesh's revenue-to-GDP ratio had fallen to 7%, placing it among the lowest in the world.
She said higher revenue collection was necessary to restore financial sector stability and finance development activities. The IMF also stressed the need for strategic measures to address major problems in the banking sector, maintain a contractionary monetary policy until high inflation comes under control, and implement reforms on schedule.
Khosru said the IMF had raised concerns about the banking sector, the tax-to-GDP ratio, bank recapitalisation and macroeconomic stability. Bangladesh agreed with the IMF's observations on these issues, and many had already been addressed, he added.
He also said the IMF is satisfied with Bangladesh's recent economic progress following the budget, despite global challenges, including the war in the Middle East.
NPL ratio rises to around 33%
Bangladesh presented plans for banking sector reforms during the discussions, including measures to restore depositor confidence and reduce non-performing loans (NPLs), a Bangladesh Bank delegation official said.
Depositors of troubled Sammilito Islami Bank are already receiving repayments, while National Bank began returning deposits yesterday as the government seeks to rebuild confidence in distressed banks through regular repayments.
The delegation is also preparing a strategy to reduce bad loans across the banking sector.
Under an IMF loan agreement signed in 2023 during the Awami League government, Bangladesh committed to reducing the NPL ratio to 10% by 2026. Instead, the ratio has climbed to around 33%.
The target for NPL reduction under the proposed new programme has yet to be determined, the official said.
The 2026 IMF-World Bank Group Annual Meetings began in Bangkok on 12 October and will continue until 18 October, bringing together finance ministers, central bank governors, policymakers and representatives of development partner organisations.
