Negotiators hope for next tranche as eligibility check starts

Government negotiators hope for next payout worth US$450 million from the IMF lending package for Bangladesh as eligibility spot-check starts with a Fund mission querying about updates and subsidy cuts.

The reappraisal team from the International Monetary Fund (IMF), beginning its hectic review work Wednesday, sought information regarding government steps on midterm budget adjustment and subsidy-reduction policies in power and other sectors, insiders said.

Headed by Chris Papageorgiou, the mission wanted to know about the arrears cleared by the government to power supplier and other local and foreign companies, officials at the Ministry of Finance (MoF) told the Financial Express.

Also, they sought to know the progress regarding NIR or net international reserves, exchange-rate management, quasi-fiscal activities, ongoing mergers and acquisitions (M&A) actions and liquidity management by the central bank.

The IMF team started its Article-IV mission in Bangladesh on Wednesday with an opening discussion with the Finance Secretary and a team of the Ministry of Finance, and Bangladesh Bank officials.

During its two-week-long stay, the mission will review Bangladesh economic and fiscal conditions through meetings with different stakeholders.

Officials of the MoF said the IMF reviewed different macroeconomic and fiscal indicators in fiscal year (FY) 2024-25 and in the current FY2026.

The Fund team sought macroeconomic indicators and outturn in the first quarters this fiscal along with budget adjustments amid different crucial scenarios.

"The team was particularly serious about the payment of arrears to the independent power producers, government's subsidy-reduction policy, budget performance and midterm fiscal projects," says one official.

The Washington-based global monetary watchdog has also requested the MoF for submitting a fiscal-expenditure projection in the remaining period of the current fiscal year.

"We have had a good meeting with the IMF team. It was an introductory meeting with Bangladesh. We hope the next meetings will bring some fruitful result for getting the IMF package (of credits)," a senior MoF official told The Financial Express.

He said they were hopeful about getting the 6th tranche worth some US$450 million from the IMF lending package by the stipulated time of December 2025.

"But we have to fulfill the conditions it set in the earlier meeting for getting the IMF bailout from its $5.5-billion package," the finance official added.

According to the ministry officials, the IMF team was very much eager to know about government's subsidy-reduction plans, especially the remittance subsidies and its implication on electricity and fertiliser.

The team also discussed the country's revenue-income status, budget expenditure and Annual Development Programme (ADP) implementation in the first quarter and government's projection in the remaining period during this FY2026.

Meanwhile, the visiting team also met Bangladesh Bank (BB) officials on the day at the central bank.

During the parleys with the central bank high-ups, the IMF review mission talked about quarterly performance criteria (QPC), structural benchmark (SB) and indicative target (IT) of the lending package up to June last, BB officials said.

Seeking anonymity, a BB official who was present at the meeting said the central bank shared the progress on the conditions set by the multilateral lending agency.

He said the team wanted to know the progress regarding NIR position, exchange- rate management, quasi-fiscal activities, ongoing mergers and acquisitions actions and liquidity management.

In terms of NIR, the IMF set targets at over $17 million, $18 billion-plus, and over $19.0 billion by the end of June, September and upcoming December respectively. Currently the NIR stands at more than $ 20 billion.

According to BB data, the country's gross reserves now stand at $32.15 billion and $27.35 billion in accordance with BB and IMF calculations respectively, as on October 29.