DHAKA, June 3 - Bangladesh has formally requested a fresh lending arrangement from the International Monetary Fund and is moving to exit its present $5.5 billion programme, government officials said on Wednesday. Dhaka plans to open talks with the IMF soon to establish a framework that will determine the size, design and conditions of any new support package.
Officials said the existing programme was negotiated in a very different economic context and that subsequent political changes, domestic pressures and heightened global uncertainty have made some of the agreed reform measures harder to put into practice. "We are not stepping back from reforms. What we want is a realistic and phased reform agenda that reflects Bangladesh’s present economic conditions," said Rashed Al Mahmud Titumir, the prime minister’s adviser on finance and planning.
Titumir added that the government would carefully review the policy framework proposed by the IMF to ensure it aligns with national priorities and current economic realities.
The IMF confirmed that discussions were taking place on reform priorities and the overall policy direction. "The Bangladeshi authorities have requested a new IMF financial arrangement to support their economic reform programme," IMF Mission Chief Ivo Krznar said in a statement on Wednesday. He added that IMF staff were engaging with Bangladeshi authorities on policy priorities and reform design, and that the Fund remains committed to supporting macroeconomic stability, resilience and inclusive growth.
An IMF staff mission is expected in the coming weeks to begin detailed negotiations on a possible new arrangement, including its size and the reform conditions it would contain.
Bangladesh entered the current IMF programme in 2023 under then Prime Minister Sheikh Hasina amid a severe foreign exchange crisis. The package, which was later expanded to $5.5 billion, contained measures focused on revenue mobilisation, energy subsidy rationalisation and greater exchange rate flexibility.
Officials said implementation of those reforms has become more difficult as the country contends with persistent inflation, slower economic growth and external shocks. They specifically cited volatility in global energy markets linked to the Middle East crisis as a factor complicating policy execution.
To ease pressures on public finances, Bangladesh has raised fuel prices twice in six weeks and increased power tariffs - steps officials say reduce subsidy burdens but which have also contributed to cost-of-living concerns among the population. Some analysts view those moves as consistent with IMF recommendations while noting the social impact of higher energy costs.
The negotiations for a new IMF arrangement are unfolding during a political transition following the ouster of Sheikh Hasina in August 2024. Officials said the incoming government is aiming to recalibrate economic policy while sustaining support from international lenders.
Clear summary
Bangladesh is seeking a new IMF financial arrangement and will exit its current $5.5 billion programme. Government officials and IMF representatives will soon begin detailed talks to agree a policy framework that is realistic and phased to reflect present economic and political conditions.
Key points
- Bangladesh requested a new IMF arrangement and will leave its existing $5.5 billion programme - impacting fiscal and sovereign financing plans.
- Implementation of prior reforms has been constrained by inflation, slower growth and external shocks, including global energy market volatility.
- Recent increases in fuel prices and power tariffs aim to reduce subsidy pressure but raise cost-of-living concerns; energy and consumer-facing sectors are particularly affected.
Risks and uncertainties
- Policy implementation risk - Domestic pressures and political change may slow or alter reform delivery, affecting fiscal consolidation and investor confidence in sovereign debt markets.
- External shock risk - Continued volatility in global energy markets could further complicate subsidy reform and public finances, with implications for the energy and utilities sectors.
- Social and cost-of-living risk - Energy price adjustments, while reducing subsidy burdens, may exacerbate inflationary pressures and weigh on consumer demand in retail and consumer staples sectors.