IMF Grants US$ 645 Million To Support Bangladesh’s Economy
The International Monetary Fund (IMF) announced on December 26 that it will grant US$ 645 million to support Bangladesh’s economy, which is US$ 105 million less than the US$ 750 million requested by the government to address its current economic challenges.
Of the total amount, US$ 426 million will be provided through the IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF), while US$ 219 million will be available under the Resilience and Sustainability Facility (RSF). This assistance brings the total financial support under the ECF and EFF arrangements to US$ 4 billion, along with US$ 1.3 billion in RSF arrangements.
The IMF’s statement follows discussions on Bangladesh’s economic situation, marked by the end of a 15-year regime under Sheikh Hasina in August 2024. Since then, an interim administration led by Nobel Peace Prize winner Professor Muhammad Yunus has been running the country.
Bangladesh’s external debt has risen to US$ 103 billion, while its nominal GDP has reached US$ 451 billion. The IMF emphasized that the country is grappling with persistent challenges, including capital outflows, inflation, and declining tax revenues, which have exacerbated pressures on its foreign exchange reserves. The IMF also noted that Bangladesh’s GDP growth is projected to slow to 3.8% in fiscal year (FY) 2025, down from over 6% in recent years.
Despite these challenges, Bangladesh’s authorities are committed to fiscal consolidation, tightening monetary policy to control inflation, and implementing exchange rate reforms. The IMF has also stressed the importance of enhancing governance, improving investment climate, and building resilience to climate change to support sustainable, green growth.
Chris Papageorgiou, IMF Deputy Unit Chief, stated that the timely formation of the interim government has helped the country gradually return to economic normalcy. However, he highlighted the need for near-term policy tightening, including fiscal consolidation, tax reforms, and improved banking sector management to strengthen Bangladesh’s resilience to external shocks.
The IMF also noted that Bangladesh’s low tax-to-GDP ratio requires urgent reforms to create a more transparent system and boost revenue. Strengthening the banking sector and advancing institutional reforms, particularly at Bangladesh Bank, are critical for the successful implementation of financial sector reforms.
