Bangladesh in talks with IMF over fresh funds to cushion fuel shock

Bangladesh will discuss additional financing with the International Monetary Fund to help cope with the risk of a fuel shock stemming from the Iran war, Finance Minister Amir Khosru Mahmud Chowdhury has said.

He said detailed talks on how much funding could be available, and under what conditions, would take place at the IMF-World Bank Spring Meetings in Washington in April.

The minister was speaking to reporters on Tuesday after a meeting with Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, at the Secretariat.

Earlier in the day, Srinivasan paid a courtesy call on Prime Minister Tarique Rahman.

Asked how the government planned to secure extra funds for fuel imports, Khosru said the issue had already been discussed and would be taken up in greater detail next month.

Referring to Bangladesh’s ongoing IMF loan programme, signed during the Awami League government, the minister said the arrangement would undergo a further review.

“This programme has been in place for several years. It will go through further review again, and there is no problem with that,” he said.

“Alongside that, we discussed measures needed to stabilise the economy, particularly addressing challenges in the banking sector, as well as steps outlined in the BNP’s election manifesto.”

He added that economic recovery would require reforms and deregulation, noting that “the banking sector remains weak, the stock market is fragile, and the tax-to-GDP ratio is under pressure”.

“We are implementing our reform commitments step by step,” Khosru said.

Referring to projects initiated under the Awami League government, the minister said many had stalled due to financial constraints and now need to be revived.

“Reviving these projects will require economic stability, which depends on reforms,” he said.

He added that the government is prioritising deregulation, ease of doing business, and reducing operational costs.

Bangladesh secured a $4.7 billion IMF loan programme in 2023, later expanded to $5.5 billion, with multiple tranches disbursed since then.

The programme formally began on Jan 30, 2023. Bangladesh received the first tranche of $476.3 million on Feb 2 that year, followed by the second tranche of $682 million in December.

The third tranche of $1.15 billion was released in June 2024, while the fourth and fifth tranches, totalling $1.337 billion, were disbursed together in June this year.

Regarding the sixth tranche, the IMF decided not to release funds before the elected government took office, following discussions on progress in meeting conditions.

Asked about the latest discussions on advancing the programme, the minister said: “Talks are ongoing. We have discussed the IMF’s requirements—what is feasible and what is not in the current economic context of Bangladesh.

“Everything cannot be implemented at once. Given where the economy stands, we need to proceed in our own way.”

When asked whether any relaxation of conditions had been sought, he said: “That will be discussed in July, during the next review.”

“The review will take place in July. In the meantime, we will prepare the budget.”

Asked if any additional funds outside the programme had been requested, he said: “No such discussions have taken place so far.”

He reiterated that detailed talks on additional financing would take place in April in Washington.

The minister also claimed that there were no disruptions to fuel supply, wages, or essential services during Ramadan and Eid, attributing this to “effective” economic management.