The International Monetary Fund (IMF) has signaled a further $1 billion in new support in addition to the ongoing $4.70 billion loan program. The agency has added some new conditions to Bangladesh for an additional $1 billion. IMF has asked for an additional 6 months for new loan waivers.
The IMF has agreed to give new loans in the next six months of 2026 after negotiating with some organizations including the Ministry of Finance of the government. However, the IMF has not shown interest in the new $3 billion loan sought by the financial advisor.
Related sources confirmed this information and said that after the change of government on August 5, the financial advisor Dr. Salehuddin Ahmed offered a new loan of 3 billion dollars to the IMF. This loan was discussed with the visiting mission of IMF in Dhaka. They have shown no interest in new loans beyond the existing $4.70 billion loan. But the IMF initially offered an alternative of one billion. In this they ask for an additional 6 months after the completion of the ongoing loan installments.
It also proposed some new reforms for new loan waivers. Bangladesh Bank agreed to fulfill the conditions in various meetings with the ongoing mission of the IMF. Sources confirm that there may be an agreement on these issues in the rap-up meeting to be held with Bangladesh Bank on Wednesday (December 18).
According to another source, Finance Advisor Salehuddin Ahmed sought a new $3 billion loan from the Washington-based multilateral lender under the existing loan program on the sidelines of the World Bank-IMF annual meeting last October. A 13-member IMF mission arrived in Bangladesh earlier this month to review Bangladesh’s performance and compliance with structural reform conditions for the fourth tranche of existing debt following the talks.
Some who participated in the meeting said that after discussing with the mission about increasing the amount of loans, the agency offered about 1 billion dollars in exchange for additional reform conditions. In that case, each of the remaining four tranches under the existing loan program would come to $1 billion.
Earlier in January last year, the IMF approved a loan of $4.7 billion for Bangladesh. So far, IMF has given 2.3 billion in 3 installments. Meanwhile, the IMF mission participated in discussions with the officials of the Ministry of Finance and Bangladesh Bank to finalize various policy documents. Policy documents include – Memorandum of Economic and Financial Policy of the Government, Letter of Intent, Technical Memorandum and Memorandum of Understanding. Officials said the IMF is satisfied with various reform initiatives of the interim government but will impose certain conditions on the next loan installment.
An official of Bangladesh Bank said, this time the IMF has emphasized on increasing revenue collection, reducing subsidies in electricity, energy and fertilizer sectors and good governance in the banking sector. The organization wanted to know the government’s plan regarding tax exemption in the next financial year’s budget in order to increase revenue collection. Moreover, the National Board of Revenue can impose conditions for differentiating policy and administration and reducing multiple VAT rates.
With respect to the central bank and the banking sector, the IMF may impose various conditions for amending the Bangladesh Bank Ordinance, the Bank Company Act and the Bankruptcy Act. The IMF can also condition the government to reduce the scope of subsidies and price adjustments.
When asked about this, a senior official of Bangladesh Bank said that the IMF mission visiting Dhaka has held regular meetings on current loans. Mission is positive in many respects. Nothing happened to speak of the newly sought 3 billion loan. However, there have been positive discussions about a new one billion dollar loan with ongoing loans. In the last meeting on Wednesday, various issues will be revealed.
