The Bangladesh Bank governor has returned home from Washington without sealing any deal with the International Monetary Fund (IMF), keeping the release of the fourth and fifth tranches of the $4.7 billion loan package hanging in uncertainty.
Despite several rounds of discussions, no breakthrough was achieved, officials confirmed on Monday. The IMF board is scheduled to meet in June to decide on the disbursement, but sources familiar with the process said many issues remain unresolved, particularly surrounding foreign exchange policies and revenue reforms.
Bangladesh has so far received three tranches from the IMF under the $4.7 billion loan programme, totaling $2.31 billion. The breakdown includes $476.3 million in February 2023, $681 million in December 2023, and $1.15 billion in June 2024 under the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) programmes.
The remaining $2.39 billion are supposed to be released in the fourth and fifth tranches, contingent on IMF board approval during their review in June 2025.
A senior Bangladesh Bank (BB) official told this correspondent that while the situation looks tough, negotiations are not over yet.
"It's still hanging, but there are scopes for discussion," he said. "Both sides have agreed to continue technical talks, and there is space to address the IMF's concerns before the June board meeting."
The official explained that the IMF has flagged the January circular on exchange rate spread, calling it inconsistent with the commitment to introduce a fully market-driven rate mechanism.
The multilateral lender wants Bangladesh to allow the dollar-taka rate to be determined entirely by market forces.
According to sources the IMF also raised alarms over revenue collection shortfalls. It stressed the need for separating tax policy and tax administration to improve efficiency and transparency, a reform the government agreed to in principle but is reluctant to rush through ahead of the upcoming budget.
"The government wants time to implement these reforms carefully," the Bangladesh Bank official said. "We explained the domestic political and economic realities. The IMF listened but stayed firm on its conditions."
Officials said the fourth tranche, which was initially supposed to be disbursed in February, was deferred as Bangladesh failed to meet the performance criteria and structural benchmarks. The fifth tranche was bundled with the fourth to be reviewed together in June.
The remaining tranches depend on Bangladesh achieving key targets, including maintaining adequate foreign exchange reserves, strengthening banking sector governance, improving public financial management, and enhancing climate resilience through sustainable initiatives.
Officials said the IMF has praised Bangladesh's efforts in stabilizing the macro economy despite global and domestic shocks. However, it pointed out serious weaknesses in the exchange rate regime, revenue generation, and financial sector supervision, particularly related to the high levels of non-performing loans.
"Progress is there, but it's not fast enough," another central bank official said. "The IMF sees the forex management and tax reforms as critical to the loan programme's success."
Sources said Bangladesh proposed a gradual adjustment to the exchange rate mechanism, but the IMF wants clear, time-bound commitments before approving further disbursements.
The central bank had hoped to soften the IMF's stance during the Washington trip, but the results fell short of expectations. "It was a difficult mission. We tried our best," the senior official admitted. "Now it's a wait-and-see situation until June."
If no agreement is reached before the June board meeting, Bangladesh risks further delays in loan disbursements, which could add pressure on foreign reserves and complicate budgetary planning for the next fiscal year.
Officials said both sides are still exchanging data and working papers to find a way forward. "We have not given up," the Bangladesh Bank official insisted. "There is still a window."
The central bank and finance ministry teams are now preparing fresh reports to address the IMF's latest queries and demands, hoping that a series of technical negotiations in the coming weeks can bridge the gaps.
Until then the fate of the fourth and fifth tranches and the overall stability of Bangladesh's economic programme with the IMF-remains uncertain.
