Bangladesh Gets $1.3 Billion from IMF as Loan Terms Grow Stricter

Just days after disbursing $1.3 billion to Bangladesh as part of its $5.5 billion loan programme, the International Monetary Fund (IMF) on Friday announced new economic conditions to help stabilise the country’s deteriorating financial situation.

According to an official press release, the IMF confirmed that the disbursed amount had been credited to Bangladesh’s account, covering the third and fourth tranches of the loan package.

Political Instability and Structural Challenges Persist

Bangladesh’s economic turmoil has worsened since the ouster of former Prime Minister Sheikh Hasina last year. An interim government led by Chief Advisor Muhammad Yunus has been in power since, but persistent political instability, a tight monetary-fiscal mix, growing trade restrictions, and rising banking sector stress continue to hurt the economy.

IMF Targets Major Cut in Arrears and Reserves Growth

In its latest programme report, the IMF laid out detailed benchmarks. One of the key conditions is a reduction in external payment arrears in the power and fertiliser sectors—from $870 million in June 2025 to $562 million by December, and further down to $254 million by June 2026.

Simultaneously, domestic arrears in these sectors must be cut in half from Tk 28,000 crore to Tk 14,070 crore by December 2025, with full clearance expected by June 2026.

“External payment arrears have surfaced, notably within the power sector’s state-owned enterprises, driven by limited foreign exchange availability and outstanding domestic subsidy arrears owed by the central government to the SOEs,” the IMF stated.

External Position Weakening Despite Short-Term Gains

While there was some improvement in the current account during the first half of FY25, the IMF warned that the broader external position has worsened. The presence of arrears among state-owned enterprises, a “substantial decline in FDI inflows,” and “significant unrecorded capital outflows” have expanded the projected external financing gap to $3.8 billion for FY25—far exceeding previous forecasts.

Revenue and Reserve Targets Significantly Increased

The IMF has raised Bangladesh’s revenue targets, requiring the National Board of Revenue (NBR) to generate Tk 443,530 crore by June 2025 and Tk 550,700 crore by June 2026.

Additionally, the country’s net international reserves must increase from the current $17.4 billion to $22.41 billion by mid-2026—an ambitious goal given the ongoing economic strain