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IMF hints at releasing remaining funds 

Published : Wednesday, 14 May, 2025 at 12:00 AM  Count : 392
This brings some relief to the interim government as the International Monetary Fund (IMF) has finally agreed to release the last two trenches of its $4.7 billion loan package by next month. As a matter of fact, Bangladesh, at the moment, has required this remaining funding worth $2.4 billion very badly to support its budget for the next financial year, improve reserve position, strengthen investor confidence and expedite the economic reforms.

However, this positive outcome from the IMF side has come after a lot of off and on technical discussions between officials of the global creditor and the Bangladesh Bank for the last several months.

IMF has delayed the disbursement of these two trenches since February because of some of its conditions for reforms remained unmet. But there has been a significant progress noticed by an IMF mission that visited Dhaka from late April to early May. For instance, the IMF team acknowledged Bangladesh's advancement in structural reforms, pointing to the launch of a formula-based fuel pricing system and ongoing efforts to stabilize the financial sector.

Earlier, the global lender put pressure on Bangladesh to relax its exchange rate policy. But Dhaka didn't budge to its condition, pushing the ball entirely in IMF's court to decide whether or not it will disburse the next two trenches of loans. Dhaka took this firm stance owing to the fact that such kind of terms and conditions might worsen Bangladesh's current economic hardships further after the changed political scenario in the country.

For this reason, Finance Adviser Dr Salehuddin Ahmed sounded a warning saying that had IMF's conditions--mainly free-floating of the taka - been accepted, the exchange rate could have risen to Tk160-200, and the situation could have mirrored what happened in Sri Lanka or Pakistan in the recent past. This is why Bangladesh had decided to go ahead without the remaining IMF loans.

Meanwhile, the international creditor has long been persuading the Bangladesh government to follow a foreign exchange rate to be determined by market forces. But Dhaka argued that the country's economic conditions do not permit full liberalisation of the exchange rate at least for now.

Apart from this, IMF has also set three other major conditions for the release of the fourth and fifth trenches loans including boosting revenue collection to address external imbalances, implementing tighter monetary policy to contain inflation and adopting green growth policies to combat climate change.

Some other conditions set by the global lender included maintaining adequate foreign exchange reserves, strengthening banking sector governance, improving public financial management. Of these, progress on exchange rate liberalisation and revenue mobilisation fell short of the IMF's conditions. But foreign currency reserves reached the target set by it.

We believe that the global creditor will release the remaining funds in time based on the progress in the on-going economic reforms undertaken by the interim government.



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