Release of International Monetary Fund (IMF) loan for Bangladesh remains stalled due to pending reforms in the financial sector, conditions to cut subsidies and climate resilience issues.
The global lender has imposed nearly a dozen conditions, including reforms in the banking sector and banking laws, capacity building of the National Board of Revenue (NBR), single-click access to taxpayer information, removal of subsidies on fuel and electricity, setting a market-based foreign exchange rate and climate resilience issues.
The government is seeking US $2.0 billion additional loan as budget support from the IMF along with the remaining tranches of the $4.7 billion loan program.
The government is seeking to reactivate the suspended IMF loan program and secure new funding. However, the IMF has made macroeconomic reforms and climate risk management capabilities the primary preconditions for this financing.
A high-level delegation from the IMF’s Fiscal Affairs Department recently completed their visit to Dhaka to review progress in key sectors and assess tax policies, which will determine the future of the loan program. According to relevant sources, financial sector reforms and climate resilience will be a major consideration in the IMF’s new credit program.
The incomplete reform activities under the previous loan program with the IMF got priority under the new program. As a result, this visit was not limited solely to assessing climate policies, but also played a crucial role in setting the future direction of economic reforms.
A six-member high-level delegation from the IMF’s Technical Assistance (TA) mission visited Bangladesh at a time when the country's capacity to address climate risks, economic reforms, and the potential for new international financing are moving in parallel. The main goal of the visit, which ran from July 19 to July 30, was to conduct a full evaluation of Bangladesh’s policies, financial structures, and institutional capabilities in tackling climate change. The findings of this evaluation will also carry significant weight in discussions regarding a potential new loan program.
Led by Suphachol Suphachalasai, Senior Economist in the Climate Policy Division of the IMF’s Fiscal Affairs Department, the delegation's primary focus is the 'Climate Policy Diagnostic' (CPD). Through this diagnostic, Bangladesh’s climate change mitigation policies, financing framework, and risk management capabilities will be thoroughly examined. Additionally, the team reviewed the country's overall macroeconomic situation and discussed a potential new loan program with the government.
The loan program under the Resilience and Sustainability Facility (RSF) is another major topic of discussion during this visit. Under the RSF, Bangladesh received a loan facility of 1 billion Special Drawing Rights (SDR), equivalent to approximately $1.4 billion. While two-thirds of the funds have already been released, the remaining portion remains suspended. Steps have now been taken to reactivate the program. Notably, Bangladesh was the first country in Asia to secure this facility.
In a report on Bangladesh, the IMF noted that the RSF would complement the Extended Credit Facility (ECF) and Extended Fund Facility (EFF). The fund aims to support measures implemented by the Bangladesh government to counter the impacts of climate change, while also helping build climate resilience and mobilizing additional public and private financing.
Meanwhile, the Finance Division recently launched the ‘Public Financial Management Reform Strategy 2025–2030.’ For the first time, this strategy document includes climate-smart public financial management and gender-responsive budgeting. Furthermore, in the FY2025–26 budget, approximately Tk 42,206.89 crore has been allocated across 25 ministries for climate-related expenditures, accounting for 10.09 percent of the total budget.
The IMF delegation held a series of meetings with relevant ministries and divisions on economic matters. The mission also meeting with Finance Secretary Dr. Md. Khairuzzaman Mozumder. Then the meeting was also with Bangladesh Bank, Financial Institutions Division, NBR and the Ministry of Power and Energy, Ministry of Forest and Environment and some other ministries.
Dr. Md. Khairuzzaman Mozumder told UNb that the IMF held separate meetings with officials from the Macroeconomic Wing and Budget Wing of the Finance Division to review progress on climate and disaster-related initiatives.
Discussions covered the current status of the ‘Bangladesh Climate Development Partnership’ and the ‘National Strategy for Disaster Risk Financing,’ alongside a detailed evaluation of how climate risks are being integrated into macroeconomic planning, he said.
“We hope that the IMF will consider different difficulties of Bangladesh to meet cent percent of the loan conditions. Despite some challenges, we are expecting the loans will be released in favour of Bangladesh,” said the finance secretary.
Meetings with the Ministry of Water Resources addressed flood control measures, delta and coastal management, irrigation policy, and surface and groundwater management—considered key elements in assessing Bangladesh’s readiness to face the long-term impacts of climate change.
According to officials, this IMF TA mission is not merely a routine evaluation; it represents a critical stage in shaping Bangladesh’s climate policies, economic reforms, and future international financing framework. The evaluations and recommendations from this visit are expected to play a decisive role in setting priorities for a new loan program.
Commenting on the matter, economist Professor Abu Ahmed told UNB that reform measures must continue for the sake of the country's economy.
He added that since Bangladesh is one of the countries most affected by climate change, enhancing national capacity to manage these impacts is an urgent necessity.