In Washington last week, the IMF’s Asia-Pacific director informed Bangladesh’s delegation that the anticipated $1.3 billion tranche would not be disbursed in June. The critical focus was not just on financial aspects but on what Bangladesh could genuinely offer in exchange and what it lacked in capability.
During the Spring Meetings, the macroeconomic outlook was the most robust in three years. With gross reserves standing at approximately $35 billion and the BPM6 measure surpassing $30 billion for the first time since mid-2023, along with record remittances of $3.75 billion in March, the IMF’s decision to pause reflects more on the credibility of reforms rather than solely on liquidity concerns.
The four outstanding conditions, including revenue mobilization, banking governance, elimination of electricity and gas subsidies, and adoption of a market-driven exchange rate, were part of the $4.7 billion program endorsed in January 2023 and later expanded to $5.5 billion in June 2025. While these conditions have been under scrutiny for eighteen months, there has been limited progress. Although the interim administration managed to stabilize the currency and bolster reserves, it fell short in implementing structural reforms.
Drawing a comparison to Pakistan in 2014, which faced similar IMF reform conditions, the key difference lies in the assets each country could leverage. Unlike Pakistan, Bangladesh lacks a substantial asset pipeline, having never issued a Eurobond and relying heavily on concessional borrowing. This poses challenges as the terms of financing may change post LDC graduation in 2026, making IMF support uncertain.
The absence of a robust asset monetization strategy further hampers Bangladesh’s negotiating position. While there are identified profitable state-owned enterprises for listing, progress has been sluggish. The fiscal challenge is evident with tax-to-GDP ratio falling below program assumptions and debt-service pressure mounting.
A lapse in the IMF program may not immediately strain the economy given strong reserves, but the long-term implications could be severe. A credible alternative is essential before the October Annual Meetings to avoid adverse impacts on ADB and World Bank operations. Options such as a remittance-backed Sukuk or partial listing of state-owned assets could be explored to strengthen the fiscal position.
The need for reforms alongside stabilization is crucial to ensure sustainable economic growth. The focus now shifts to what Bangladesh can realistically offer in exchange for continued support.
