The International Monetary Fund (IMF) staff team concluded a five-day visit to Dhaka on Thursday, projecting Bangladesh's economic growth to moderate to 3.5 percent in FY2026-27 and weaken further below 3 percent over the medium term in the absence of decisive reforms.
The visit, which took place from July 12 to 16, 2026, was led by Ivo Krznar following a request from the Bangladesh government for a new Fund-supported economic reform program. The mission aimed to take stock of recent developments and discuss the authorities' policy plans and reform priorities.
"Bangladesh continues to face significant fiscal, financial, and inflationary challenges, which have been compounded by the war in the Middle East," Krznar said in a statement issued at the end of the visit.
He noted that higher global commodity prices and supply disruptions have renewed inflationary pressures, increased subsidy costs, and further constrained the country's limited fiscal space. Elevated banking sector stress and external pressures also continue to weigh on the economy, despite strong remittance growth.
The IMF warned that risks to the economic outlook remain tilted to the downside due to the potential interaction of banking sector strains, fiscal challenges, and external pressures.
To address these compounding weaknesses and safeguard macro-financial stability, the IMF team recommended several priority policy measures.
Revenue and Subsidy Reform: Stronger revenue mobilization and subsidy rationalization are needed to create fiscal space for priority social and development spending. Well-targeted social support should be implemented to protect vulnerable households.
Monetary and Fiscal Stance: The government should maintain tight monetary and prudent fiscal policies to tame inflation and rebuild foreign exchange reserves.
Exchange Rate Flexibility: Consistent implementation of the crawling peg regime adopted in 2025 is essential to enhance exchange rate flexibility and safeguard external stability.
Banking Sector Cleanup: Restructuring of the banking sector should be anchored in a credible, comprehensive strategy with a well-managed cleanup to support investment.
Looking ahead, Krznar indicated that discussions on the possible parameters of a new arrangement—including its size and associated reform commitments—will take place in the coming months.