IMF loan tranches delayed amid exchange rate dispute; further talks scheduled

Bangladesh's access to the fourth and fifth tranches of its $4.7 billion IMF loan remains uncertain, as recent negotiations failed to resolve disagreements over the adoption of a market-driven exchange rate.

The IMF continues to insist on greater exchange rate flexibility, while the Bangladesh Bank (BB) remains cautious, citing concerns over potential inflationary impacts and political repercussions.

A virtual meeting on Monday, attended by BB Governor Ahsan H. Mansur and Deputy Governors Md Habibur Rahman and Md Kabir Ahmed, concluded without an agreement.

Finance Adviser Salehuddin Ahmed, speaking from Rome where he is attending an ADB event, confirmed that no decision was reached regarding the exchange rate policy, according to local media.

Another meeting between IMF officials and the central bank is scheduled for Tuesday in an effort to break the deadlock.

The IMF has emphasised that adopting a fully market-based exchange rate is a critical condition for the release of the next loan tranches.

Bangladesh Bank officials, however, have expressed reluctance to allow further depreciation of the taka, fearing it could exacerbate inflation and economic instability. They have indicated a preference to monitor inflation trends before making any significant changes to the exchange rate policy .

The release of the fourth and fifth tranches, totalling approximately $1.175 billion, was initially expected earlier this year but has been postponed due to unmet conditions. If an agreement is reached, both tranches may be disbursed together in June .

As discussions continue, the outcome of the upcoming meeting will be pivotal in determining the future of Bangladesh's IMF loan programme and its broader economic reform agenda.