Previous loan settlement with Bangladesh no longer viable after political transition: IMF
The IMF sees opportunities to work jointly with Bangladesh on future economic priorities and remains committed to supporting the country's inclusive development goals, Julie Kozack, director of the Communications Department at the IMF, says.
The International Monetary Fund (IMF) has said there is no scope to move forward with its previous loan settlement with Bangladesh following changes in the country's political leadership.
Speaking at a press briefing in Washington on Thursday (4 June), Julie Kozack, director of the Communications Department at the IMF, said both Bangladesh's political and macroeconomic environment have changed, making it necessary to discuss a new financing programme rather than continue under the earlier framework.
She noted that the IMF sees opportunities to work jointly with Bangladesh on future economic priorities and remains committed to supporting the country's inclusive development goals.
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Kozack also said these issues would be among the key priorities in discussions with the IMF's new mission in Dhaka, as both sides explore the contours of a possible future programme.
Her remarks come after the Bangladesh government recently decided to move away from the existing loan programme agreed with the previous Awami League administration and seek a new financing arrangement under revised terms.
During a virtual meeting on 21 May between Finance and Planning Minister Amir Khosru Mahmud Chowdhury and IMF Deputy Managing Director Nigel Clarke, Bangladesh proposed negotiating a fresh $5 billion credit package with a more realistic reform timeline.
According to the Ministry of Finance, the government argued that the current IMF programme was designed under a different economic and political context and that subsequent domestic developments and global uncertainties had made implementation of some reform conditions difficult.
The decision follows months of discussions over several IMF-backed reform measures, including the introduction of a uniform 15% VAT rate, the withdrawal of tax exemptions, and the replacement of broad electricity and fertiliser subsidies with targeted cash transfer programmes.
Government officials have said they remain committed to macroeconomic stability and structural reforms but want future reform commitments to be implemented in a manner that reflects Bangladesh's economic realities and policy priorities.
An IMF mission is expected to visit Dhaka in July or August to discuss the size, timeline and conditions of a possible new programme.
