The International Monetary Fund (IMF) has issued a cautionary warning to Bangladesh regarding the extension of liquidity to weak banks, urging that such measures be approached with utmost care. In tandem, the Fund has called for the full and consistent implementation of exchange rate reforms to ensure broader economic stability.
Following the 2024 mass uprising and ahead of the forthcoming national elections, the IMF acknowledged the interim government’s efforts to maintain macroeconomic stability. The statement was released on Friday after the conclusion of Bangladesh’s Article IV consultation, as part of the Fund’s review of progress in implementing conditions linked to a pledged USD 5.5 billion loan package.
According to the IMF, restoring financial stability in Bangladesh requires a credible bank sector reform strategy aligned with international standards. Such a strategy should include a clear assessment of capital shortfalls, the design of appropriate fiscal support mechanisms, and a legally robust framework for bank restructuring and resolution.
The Fund specifically recommended enhanced oversight of state-owned banks, including:
Reviewing asset quality and strengthening risk-based supervision
Improving governance and transparency of balance sheets
Rebuilding foreign exchange reserves and maintaining coordinated policies to control inflation
The IMF stressed that exchange rate reforms should be implemented comprehensively and consistently, with greater flexibility to respond to market dynamics. Liquidity support for weaker banks should be extended only cautiously, and monetary policy must remain tight until inflation shows a sustained downward trend.
According to IMF data, although inflation fell below double digits at the start of FY2024–25, it stood at 8.2% in October 2024. The Fund projects inflation at 8.9% in FY2025–26, declining to approximately 6% by 2027.
The IMF highlighted that Bangladesh faces mounting macro-financial challenges due to weak revenue mobilisation and vulnerabilities in the financial sector. Delays in implementing bold fiscal and financial reforms could expose the economy to significant downside risks.
Key Economic Indicators for Bangladesh (IMF Projections)
| Indicator | FY2024–25 (Initial) | FY2025–26 (Projected) | FY2027 (Medium-Term) |
|---|---|---|---|
| Inflation (%) | 8.2 | 8.9 | ~6 |
| GDP Growth (%) | 4.5 | 4.7 | ~6 |
| Foreign Exchange Reserves | Rebuilding | Rebuilding | Stable |
The Fund also urged authorities to:
Preserve fiscal stability and strengthen macro-financial resilience
Implement structural reforms to boost employment and economic diversification
Rationalise subsidies and prioritise growth-enhancing investments
Reinforce social protection systems and promote inclusive development
The IMF concluded that weak revenue collection, banking sector risks, incomplete implementation of exchange rate reforms, and elevated inflation could constrain Bangladesh’s macroeconomic stability and growth prospects. Comprehensive structural reforms, alongside prudent fiscal and monetary management, are essential to ensure sustained growth and financial resilience in the medium term.