Bangladesh passes IMF test, gets $1.3b lifeline
It slashes Bangladesh’s GDP growth forecast for next fiscal year to 5.4%
The International Monetary Fund (IMF) has approved over $1.3 billion in fourth and fifth instalments of its $4.7 billion loans to Bangladesh.
"The IMF Executive Board concluded the combined third and fourth reviews of Bangladesh's arrangements under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and approved an extension, augmentation and rephasing of access. This decision provides Bangladesh with immediate access to about $884 million," reads an IMF press release issued on Monday.
Meanwhile, the multilateral lending agency has lowered Bangladesh's GDP growth projection to 5.4% for the 2025-26 fiscal year from its earlier forecast of 6.5%.
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"The IMF Executive Board also concluded the combined Third and Fourth Reviews of Bangladesh's arrangement under the Resilience and Sustainability Facility (RSF), making available about $453 million to support the Bangladesh economy's resilience to climate change," reads the press release.
The global lender said Bangladesh's programme performance has been broadly satisfactory despite the difficult political and economic context and increased downside risks.
"Advancing the reform agenda is critical to restoring economic stability, protecting the vulnerable, and supporting inclusive and environmentally sustainable growth," it states.
Moreover, the IMF Executive Board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions based on the temporary nature of the non-observance and the implementation of corrective measures, reads the release.
GDP growth forecast lowered
In another press release issued on Monday, the IMF stated that Bangladesh's economic outlook has worsened due to persistent political uncertainty, continuation of a tighter policy mix, rising trade barriers, and increasing stress in the banking sector.
"Bangladesh's macroeconomic challenges have increased since the popular uprising in the summer of 2024, which led to the ouster of the previous government. The timely formation of an interim government has helped stabilize political and security conditions, fostering a gradual return to economic stability," reads the release.
Meanwhile, for the current fiscal year, the IMF now expects a 3.8% growth rate, which is lower than the Bangladesh Bureau of Statistics' estimate of 3.97%.
