The International Monetary Fund (IMF) has issued a new directive regarding the disbursement of the sixth loan installment to Bangladesh. The organization has stated it will not release the funds unless there is an elected government in place. Disbursement will only occur after engaging with the new administration and securing a commitment to ongoing reforms.

During a recent meeting in Washington, held on the sidelines of the IMF-World Bank Annual Meetings, this message was conveyed to Bangladesh Bank Governor Dr. Ahsan H. Mansur.

The sixth installment amounts to approximately $800 million. However, the IMF has expressed reluctance to release it until there’s clarity on the new government’s policy stance and continuity of reforms.

Governor Mansur noted that although the installment was scheduled for December, the IMF is unwilling to proceed before the elections. He added:

“Our reserves are stable, and the dollar is under control. IMF’s policy support is valuable, but the country can manage without their funds.”

“If the IMF imposes harsh conditions, Bangladesh will not comply. The country is no longer in crisis like before.”

According to insiders, the IMF is using the upcoming elections to pressure Bangladesh into meeting reform conditions. Withholding funds signals to the global community that Bangladesh has not yet fulfilled its commitments. Once a new government is in place, the IMF plans to resume discussions and seek formal commitments before releasing the next tranche.

This is not unprecedented in 2001, the IMF applied similar pressure before Bangladesh’s national election. More recently, in 2022, under loan conditions, the government was compelled to raise fuel and gas prices and tighten monetary policy, contributing to rising inflation.

Meanwhile, an IMF delegation is set to visit Dhaka on October 29 to review progress on loan conditions. They will hold meetings over two weeks with various government bodies before submitting an evaluation report, which will play a crucial role in determining the release of the sixth installment.

According to Bangladesh Bank, current foreign currency reserves stand at $32.14 billion, with remittance and export earnings showing positive momentum, import costs under control, and no current account deficit.

Bangladesh sought IMF assistance in 2022 amid global economic pressures. In January 2023, the IMF approved a $4.7 billion loan, later increased to $5.5 billion. So far, $3.6 billion has been disbursed in five installments.