Financial sector vulnerabilities have become more visible, says IMF pledging continued support to Bangladesh
IMF backs Bangladesh's efforts to implement policy adjustments, including ongoing monetary tightening and the rationalisation of non-essential capital spending, in response to the current economic challenges
The International Monetary Fund (IMF) will continue to work closely with authorities in Bangladesh to advance the country's reform agenda, the global financial institution said in a statement today (30 September).
An IMF mission team led by Chris Papageorgiou visited Dhaka during 24-30 September to discuss recent developments and the authorities' reform priorities.
At the end of the mission, Papageorgiou issued the following statement:
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"We are deeply saddened by the loss of lives and injuries during the recent public uprising and stand in solidarity with the people of Bangladesh during these difficult times. The timely formation of an interim government has helped stabilize political and security conditions, fostering a gradual return to normalcy in the economy.
"Nonetheless, economic activity has slowed markedly, while inflation remains at double-digit levels, owing to the recent turbulence and major floods. The deterioration in the balance of payments has put additional pressure on foreign exchange reserves. Concurrently, tax revenue collection has declined, while spending pressures have increased, and domestic payment arrears have accumulated. Financial sector vulnerabilities have become more pronounced. In this context, the authorities and IMF staff have held open and productive discussions on the policies and reforms needed to address these emerging challenges. We support the authorities' efforts to initiate policy adjustments, including continued monetary tightening and rationalizing non-priority capital spending, in response to these challenging circumstances.
"The IMF remains a steadfast partner, fully committed to supporting Bangladesh and its people. Within the framework of the ongoing IMF-supported program, we will continue to work closely with the authorities to advance Bangladesh's reform agenda, which aims to ensure macroeconomic stability, promote job creation, strengthen institutions, and foster strong, sustainable, and equitable growth. We welcome the authorities' renewed commitment to implementing the reforms under the IMF-supported program. Discussions on how to proceed with program reviews will continue during the upcoming 2024 IMF-World Bank Annual Meetings.
"The IMF team is grateful to the Bangladeshi authorities and other stakeholders for their hospitality and candid discussions. The team held meetings with Finance Advisor Saleh Uddin Ahmed, Bangladesh Bank Governor Ahsan Mansur, and other senior officials. The team also met with representatives from the private sector, think tanks, bilateral donors, and development partners."
