Stalemate prevails over loan-release negotiations

Government negotiations with the International Monetary Fund on the release of next tranches of its US$5.5-billion credit programme couldn't make tangible progress, sources say, prompting IMF rethink.

After returning home from Washington, DC, Finance Minister Amir Khasru Mahmud Chowdhury in a briefing on April 19 told newsmen that the discussion with the IMF was going on and "it may continue 15 to 20 days, even a month". Mr Chowdhury and his team had discussed with the IMF high-ups the reform conditions on the sidelines of the Spring Meetings of the IMF and the World Bank Group on April 13-18.

However, people familiar with the developments told The Financial Express that there was hardly any progress made so far which can be considered as significant one leading to release of the due tranches.

Until now, Bangladesh has received $3.595 billion under the credit programme which is about to end by this December. Some $1.3 billion in two tranches remained due since June last year.

Officials say unless the government makes a clear-cut announcement regarding carrying out the remaining reforms within a stipulated time, there is hardly any possibility that the IMF will agree to release the remaining funds.

"The IMF is waiting to see what announcements are coming in the next budget speech regarding the reforms. If anything is not specific, the lender may consider cancelling the programme," says a senior official having knowledge about the developments.

In that case, he predicts, the two sides may begin talks for taking fresh programme instead of carrying forward the credit programme negotiated by the government of Awami League back in 2022.

"I don't see any more possibility that Bangladesh is getting any tranche of the IMF loan within this fiscal year," says another official.

On the other hand, he says, if discussions reach a satisfactory level, two due tranches may be released in September or the entire remaining amount altogether in December before the programme tenure is over.

The IMF this past January, after conclusion of Article IV Consultation with Bangladesh, said: "Weak revenue mobilisation, banking sector vulnerabilities, incomplete implementation of the new exchange rate framework, and elevated inflation are weighing on macroeconomic stability and growth prospects."

The IMF board of directors also observed an uneven programme performance and emphasised that decisive and sustained policy actions and bold reforms are needed to restore macroeconomic and financial stability and support the country's long-term development goals.

"The performance criterion on government revenue collection was missed by a wide margin. The authorities have yet to adopt a high-level reform strategy for restoring banking-sector stability, as was agreed at the 3rd and 4th combined review," it said.

Also, the IMF said Bangladesh Bank would need to adjust its forex-intervention practices to meet conditionality on the exchange-rate arrangement. "While the primary deficit target was met, this was achieved through significant cuts in capital and social spending."

Sources mention that the new government last month passed the Bank Resolution Act 2026 amending the Bank Resolution Ordinance 2025 under which the post-uprising interim government had taken step for merging five troubled shariah-based banks.

However, while passing the act in parliament, the Ministry of Finance interpolated a provision which paved the way for the former owners to regain control of the five banks by paying the money injected by the government on very easy terms.

The IMF and other development partners did not take the amendment positively. In response, recently, the World Bank suggested that Bangladesh repeal the Section 18(A) of the Bank Resolution Act 2026 if the country wants to get $500 million as a budget- support credit.

Finance Minister Amir Khasru Mahmud Chowdhury and Finance Secretary Khairuzzaman Mozumder could not be reached for a comment

syful-islam@outlook.com