Bangladesh to seek addl IMF, WB support ahead of LDC graduation

Bangladesh will seek additional financial support from the World Bank (WB) and the International Monetary Fund (IMF) to cushion the economic impact of its graduation from Least-Developed Country (LDC) status next year, officials confirmed on Thursday.

The government also intends to request both global lenders to continue their support during the upcoming national elections in February 2025, amid concerns that the political cycle could dampen investor confidence.

A high-powered 15-member delegation, led by Finance Advisor Dr Salehuddin Ahmed, will attend the IMF-World Bank Annual Meetings in Washington from October 13-18 to table these requests.

"We will seek additional financial support from the WB and the IMF as Bangladesh prepares to graduate from its LDC status. The graduation will have implications for trade and investment," said a senior Economic Relations Division (ERD) official.

He added that, in addition to the World Bank's earmarked assistance under the IDA-21 aid package, Bangladesh would require extended support to tackle the impact of graduation on its economy.

The delegation includes Special Envoy to the Chief Advisor Lutfey Siddiqi, Bangladesh Bank Governor Dr Ahsan H Mansur and Deputy Governor Dr Habibur Rahman, former Public Administration Secretary and Planning Commission Member Dr Mukhles ur Rahman, as well as secretaries from the ERD and Finance Division, and the Chairman of the National Board of Revenue.

According to ERD officials, the World Bank is expected to allocate around US$4.5 billion for Bangladesh under the IDA-21 package. The final amount of the three-year programme (FY2026-FY2028) will be confirmed at the Washington meetings.

"Since Bangladesh will graduate from LDC to developing nation status next year, existing trade and investment benefits will be reduced. We therefore need special support from both global lenders," said another ERD official.

He added that the February 2025 elections could also weaken foreign investment flows. "We will request the IMF and WB to continue their support during this period," he said.

Officials indicated that the government is expecting several budget support measures within the current FY2026, including $400 million for the Financial Sector Support Project-2, $500 million under the Jobs and Growth Development Policy Credit, and another $500 million guarantee for fuel imports.

The Bangladesh delegation is also scheduled to hold meetings with the World Bank Vice President for South Asia, the Managing Director of MIGA, and the South Asia Chief of the IMF on the sidelines of the Annual Meetings.

Under the IDA-20 cycle (FY2023-FY2025), the World Bank committed a total of $6.63 billion to Bangladesh through concessional lending, guarantees, grants, and repurposed funds. Core IDA allocations, excluding these instruments, stood at $4.87 billion.

The World Bank remains the country's largest multilateral development partner, disbursing nearly US$1.5 billion annually.

Separately, the IMF in 2023 committed $4.7 billion in credit support to Bangladesh to help withstand the shocks from the Covid-19 pandemic and the Russia-Ukraine war.

Currently, the World Bank charges Bangladesh a 0.75 per cent service fee and 1.25 per cent interest rate on its loans.