The International Monetary Fund (IMF) mission and Bangladesh have reached a staff-level agreement on the policies needed to complete the first review for $681 million in the second portion of its $4.70 billion loan.

The IMF issued the statement after concluding its first review through a series of meetings with the stakeholders of Bangladesh.

The staff-level agreement is subject to IMF Management approval and Executive Board endorsement, which is expected in the coming weeks, the statement said.

The Bangladeshi stakeholders and IMF staff conducted discussions for the 2023 Article IV consultation and reached staff-level agreement on the policies needed to complete the first review under the ECF/EFF/RSF arrangements, the statement further said.

The global lender of last resort said that Bangladesh has made substantial progress on structural reforms under the IMF-supported program, but challenges remain. Continued global financial tightening, coupled with existing vulnerabilities, is making macroeconomic management challenging, putting pressures on the Taka and FX reserves.

It said further monetary tightening, supported by neutral fiscal policy, and greater exchange rate flexibility, is needed to restore near-term macroeconomic stability.

Article IV policy consultation focused on reforms to create additional fiscal space for social and developmental spending; modernize policy frameworks; enhance governance; and strengthen climate resilience.

The IMF team is also grateful to the Bangladesh authorities and other stakeholders for their hospitality and candid discussions.

The team held meetings with Finance Minister A H M Mustafa Kamal, Bangladesh Bank Governor Abdur Rouf Talukder, and other senior government and central bank officials. The team also met with representatives from the private sector, think tanks, bilateral donors, and development partners.