Fourth, fifth tranches of IMF loan may arrive in June: Finance Advisor Salehuddin

The fourth and fifth instalments of Bangladesh’s $4.7 billion loan package from the International Monetary Fund, or IMF, which have been delayed due to unmet conditions, could be disbursed together in June, according to Finance Advisor Salehuddin Ahmed.

Speaking after a session of the District Commissioners' Conference at the Osmani Memorial Auditorium in Dhaka on Monday, Salehuddin said a decision on releasing the next two tranches would be made in June, depending on an agreement with the IMF.

"We told them that it's not feasible to meet so many conditions at once," he said.

"They have suggested, and we have also proposed, releasing two instalments together in June."

To secure the $4.7 billion loan, Bangladesh must implement a series of financial sector reforms, with specific conditions attached to each funding tranche.

The release of the fourth instalment, in particular, hinges on the fulfilment of four key requirements.

These conditions include strengthening revenue collection to manage external pressures, tightening monetary policy to curb inflation, allowing the foreign exchange rate to be fully determined by the market, and adopting policies that promote environmentally sustainable growth in response to climate change.

However, the IMF has remained unconvinced by Bangladesh’s progress in meeting key conditions on exchange rate reforms and revenue collection.

The IMF had initially planned to release $645 million as part of the fourth instalment by Feb 10, following a third review and a board meeting scheduled for Feb 5.

The financial agency postponed its board meeting to Mar 12, further delaying the approval of the fourth instalment of Bangladesh’s loan.

Before authorising the disbursement, an IMF mission conducted a review in Dhaka from Dec 4 to Dec 18, assessing Bangladesh’s compliance with the conditions tied to the third tranche.

At the end of its visit, the IMF delegation announced that it had reached a staff-level agreement with the Bangladesh government for an additional $750 million loan. The supplementary funding is intended to bolster the country’s foreign exchange reserves, support financial sector reforms, and help manage broader economic pressures.

If approved by the IMF board, the new loan would raise the total assistance package for Bangladesh from $4.7 billion to $5.3 billion.

In a statement following its December visit, the IMF noted that Bangladesh’s economy had begun to stabilise under the interim government, despite changes in the political landscape.

However, the pace of economic activity has slowed considerably, while inflation continues to rise, exacerbating financial pressures.

The IMF also pointed to concerns over capital flight, particularly illicit outflows from the banking sector, which have strained the country’s foreign exchange reserves. At the same time, government spending has come under mounting pressure amid a decline in revenue, adding further stress to the financial sector.

Against this backdrop, the IMF projected that Bangladesh’s GDP growth could slow to 3.8 percent by the end of the 2024-25 fiscal year.