The International Monetary Fund (IMF) has expressed satisfaction with Bangladesh’s recent macroeconomic performance, highlighting significant progress in economic recovery and stability.
At a press conference held at Bangladesh Bank headquarters, IMF Mission Chief Chris Papageorgiou commended the interim government’s efforts, stating, “Bangladesh is seeing very good progress in terms of recovery and macroeconomic stability since the uprising last summer. The interim government led by the chief adviser, financial adviser, and governor should be praised for the progress.”
The IMF mission, which visited Dhaka from April 6 to 17, 2025, conducted discussions on economic and financial policies as part of the combined third and fourth reviews of Bangladesh’s Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).BSS
Despite challenges such as elevated global uncertainty, Bangladesh’s economy has shown resilience. Headline inflation, which peaked at a decade-high of 11.7% in July 2024, eased to 9.4% year-on-year in March 2025, though it remains above the Bangladesh Bank’s target range of 5–6%.
To address the external financing gap and sustain the decline in inflation, the IMF recommends near-term policy tightening. Fiscal consolidation should prioritize swift implementation of tax policy reforms to remove extensive tax preferential treatments and simplify the tax system.
Papageorgiou emphasized the importance of carefully calibrating the monetary stance to avoid premature easing, which will help anchor inflation expectations. He also advocated for greater exchange rate flexibility to support price competitiveness, rebuild foreign exchange reserve buffers, and strengthen the economy’s resilience against external shocks.
A comprehensive strategy to boost revenue and reform expenditures is deemed crucial for supporting increased social spending and infrastructure investment. The IMF highlighted Bangladesh’s persistently low tax-to-GDP ratio, underscoring the need for tax reforms aimed at building a more equitable, transparent, and streamlined system—one that ensures sustainable revenue growth, reduces widespread tax exemptions, improves compliance, and distinctly separates tax policy from administration.BSS
Financial sector reforms are also essential for maintaining stability. Legal reforms should align with international standards, and authorities must move quickly to operationalize new frameworks that enable orderly bank restructuring while protecting small depositors. Effective asset quality reviews, strengthened risk-based supervision, and improved governance and transparency will be critical to restoring confidence and supporting the sector’s health.
Papageorgiou further emphasized the importance of sustaining the pace of structural reforms to tackle the country’s economic challenges. Improving governance and increasing transparency will play a vital role in creating a more favorable investment environment, boosting foreign direct investment (FDI), and expanding export sectors beyond ready-made garments. Progress in Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) risk assessments and enhancements in data quality are equally important.
Enhancing resilience to climate change is also key for mitigating macroeconomic and fiscal risks. Improving institutional capacity and ensuring more efficient use of resources will support progress toward climate objectives. The IMF recommends that the government prioritize climate-responsive fiscal reforms and direct investments toward sustainable, resilient infrastructure. Effectively managing climate-related risks will help safeguard financial sector stability.
Discussions are ongoing with the objective of reaching a staff-level agreement in the near term—including during the April 2025 IMF-World Bank Spring Meetings in Washington, DC—to pave the way for the completion of the combined third and fourth program review. The IMF reaffirmed its commitment to support Bangladesh and its people during this challenging period.
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