BD eyes fresh $4.5b IMF loan amid economic pressures

The 2026 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group conclude on Sunday, with Bangladesh seeking fresh financing, budget support and international cooperation to address rising energy costs and maintain economic stability amid global uncertainty.

Bangladesh hopes to reach a new IMF loan agreement next year, with discussions focusing on a possible $4.5 billion programme. The proposed arrangement could run from December 2026 to December 2029, with funds disbursed in instalments. However, the amount, duration and conditions have yet to be finalised.

Inflation control, revenue mobilisation, banking sector reforms and improved financial governance are expected to remain key issues in the negotiations.

On the sidelines of the meetings in Bangkok, the Bangladesh delegation held discussions with the IMF, the World Bank and the US Treasury Department. 

Finance Minister Amir Khasru Mahmud Chowdhury met IMF Deputy Managing Director Nigel Clarke to discuss the country's economic situation, rising energy costs and ongoing reforms.

Bangladesh has also sought World Bank support to manage higher energy costs. The government is pursuing Chinese investment and greater international support for agriculture through cooperation with the International Fund for Agricultural Development (IFAD).

The US Treasury Department has also indicated its willingness to support Bangladesh's economic stability and reform efforts. The government expects greater clarity on potential assistance within the next two to three months.

Debt burden and revenue challenges
IMF Managing Director Kristalina Georgieva highlighted the growing debt burden on low-income countries, saying the share of government revenue spent on debt servicing had risen from 8 per cent to 14 per cent in recent years amid inflation and high interest rates.

The rising burden is squeezing funds available for education, healthcare, infrastructure and social protection.
The challenge is particularly relevant for Bangladesh, where the tax-to-GDP ratio remains around 7 per cent. Expanding the tax base, strengthening tax administration, preventing evasion and improving public spending efficiency are crucial to reducing dependence on external financing.

Georgieva said countries facing immediate financing gaps despite sustainable long-term debt should receive support to mobilise domestic revenue and attract private investment. Those facing severe debt distress need timely restructuring and concessional financing, with initiatives such as the G20 Common Framework playing an important role.

The IMF has also highlighted reforms to its Poverty Reduction and Growth Trust, which could increase its capacity to provide concessional lending to low-income countries by more than threefold. Bangladesh's eligibility for specific support would depend on programme requirements and conditions.

France, Germany, Ireland, Italy, Japan, Kazakhstan, Luxembourg, the Netherlands, Spain and Switzerland have pledged at least $100 million in new contributions to support the IMF's capacity development activities.

Banking sector reform remains crucial
Bangladesh's banking sector faces persistent challenges, including non-performing loans, financial irregularities, weak supervision and concerns over transparency in financial statements.

Strengthening balance-sheet transparency, reforming the legal framework and ensuring accountability for financial misconduct are essential to restoring confidence and attracting investment.

The meetings also highlighted emerging risks from artificial intelligence (AI) and digital financial services.
At a seminar on financial stability assessment at the Queen Sirikit National Convention Centre in Bangkok on Saturday, Bank of Greece Deputy Governor Christina Papakonstantinou warned that AI-driven cyberattacks could compromise customer passwords and financial information.

IMF Deputy Director Michaela Erbenova said the growth of digital transactions was accompanied by rising financial risks. She stressed the need for regulators to strengthen technological capabilities, improve risk-based supervision and update regulatory and reporting frameworks.

For Bangladesh, where mobile financial services, digital banking and online transactions are expanding, stronger cybersecurity and effective complaint-handling mechanisms will be vital to maintaining public confidence.

Reforms key to lasting stability
Georgieva also highlighted Thailand's economic progress, noting that sound policies, strong institutions and integration into global AI supply chains had supported its development. Thailand is hosting the IMF-World Bank annual meetings for the first time in 35 years.

For Bangladesh, the meetings underscore that fresh loans alone cannot ensure long-term economic stability. Revenue mobilisation, sound banking governance, increased investment and efficient public spending will be equally important.

A new IMF agreement could help meet the country's financing needs, but its lasting benefits will depend on the implementation of reforms and improvements in economic management.