The International Monetary Fund (IMF) has agreed to release the fourth and fifth tranches of its loan to Bangladesh following the country’s decision to introduce greater flexibility in its exchange rate policy.
After a series of high-level meetings led by Bangladesh Bank Governor Ahsan H. Mansur, the central bank reached an understanding with the IMF, paving the way for the release of the long-awaited loan installments. The agreement was made based on the condition that Bangladesh would adopt a more flexible exchange rate system under the ‘crawling peg’ mechanism.
The crawling peg system, now widened from a 2.5% to a 4% corridor, sets the mid-rate at Tk 119 per US dollar. This adjustment will result in a slight increase in the dollar rate, aligning with IMF recommendations for a more market-based approach.
Bangladesh initially signed a $4.7 billion loan agreement with the IMF in early 2023 to help navigate its financial challenges. The loan program officially began on January 30, 2023, with the first tranche of $476.3 million disbursed on February 2. The second tranche of $682 million followed in December 2023, and the third tranche of $1.15 billion was received in June 2024, totaling $2.31 billion so far.
However, delays in meeting IMF conditions—particularly on exchange rate flexibility, reserve targets, and revenue reforms—had stalled the disbursement of the fourth and fifth tranches. With recent policy adjustments, the IMF has now approved the release of the remaining $2.39 billion, bringing renewed support for Bangladesh’s economic stabilization efforts.
LND/BG
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