The International Monetary Fund (IMF) has announced that it will not release the sixth installment of its loan to Bangladesh until a newly elected government is formed. The organization has stated that the installment will only be disbursed once discussions with the new government take place and it commits to continuing the reform program.
It is worth noting that Bangladesh is expected to receive around $800 million in the sixth installment. However, the IMF has expressed reluctance to disburse the funds until there is clarity on the continuity of the ongoing reform agenda and the new government's policy stance.
This message was conveyed during a recent meeting between the Governor of Bangladesh Bank, Dr. Ahsan H. Mansur, and the IMF, held on the sidelines of the IMF and World Bank annual meetings in Washington. According to the Governor, although the installment was scheduled for release this December, the IMF is unwilling to proceed before the elections.
He stated, “The reserve situation is stable, the dollar is steady. IMF’s policy support is important, but the country will manage even without their funds.”
Economic advisor Dr. Salehuddin Ahmed commented, “If the IMF imposes harsh conditions, Bangladesh will not accept them. The country is not in the same crisis as before.”
According to insiders, the IMF is using this moment ahead of the elections to exert pressure to implement its conditions. Withholding the loan before the election sends a global signal that Bangladesh is not complying with the terms. The IMF intends to secure commitments from the incoming government before releasing the funds.
This is not unprecedented — the IMF applied similar pressure before the 2001 elections. In 2022, the government was also compelled to raise fuel and gas prices under loan conditions that included tightening energy and monetary policy. The resulting currency devaluation significantly contributed to rising inflation.
Meanwhile, an IMF delegation is scheduled to visit Dhaka on October 29 to review the conditions tied to the sixth installment. Over a two-week period, they will meet with various government agencies and later submit an evaluation report to the IMF headquarters. This report will play a crucial role in determining whether the installment will be released.
According to Bangladesh Bank sources, the current foreign exchange reserves stand at $32.14 billion. Remittances and exports are showing positive trends, and import expenses are under control, with no deficit in the current account.
It is worth mentioning that in response to global economic pressure in 2022, the Bangladeshi government sought assistance from the IMF. In January 2023, the IMF approved a $4.7 billion loan package, which was later increased to $5.5 billion. Bangladesh has already received $3.6 billion in five installments.