The International Monetary Fund (IMF) has escalated Bangladesh's economic challenges by refusing to release the country's sixth loan installment of $800 million. The IMF has stated that this tranche won't be disbursed until a new government is formed in the country and explicitly commits to continuing the existing economic reform program. An interim government was established in Bangladesh following a coup last year, with elections scheduled for next year, while this decision by the IMF directly increases pressure on Yunus's interim government.
Background and IMF's Stance
Bangladesh sought assistance from the IMF in 2022 amidst global economic pressures. In January 2023, the IMF approved a $4. 7 billion loan package, which was later increased to $5. 5 billion. To date, Bangladesh has received $3. 6 billion in five installments. The IMF has made it clear that it's unwilling to provide the sixth installment to Yunus's interim government. The organization believes it would be premature to release the next tranche without certainty regarding the new government's policies and its commitment to continue the existing economic reform program. The IMF wants to ascertain whether the incoming government is prepared to advance the same economic policies and reforms or intends to introduce changes.
Bangladesh's Response and Future Strategy
This information emerged recently during the annual IMF and World Bank meetings held in Washington. Bangladesh Bank Governor Dr, while ahsan H. Mansoor stated that the installment was originally scheduled for release in December, but the IMF decided to halt it before the elections. Governor Mansoor defended the country's economic situation, asserting that foreign exchange reserves are stable, and Bangladesh can manage its economic position even if the loan installment is temporarily withheld. Economic advisor Dr, while salehuddin Ahmed also stated that Bangladesh wouldn't accept strict IMF conditions, as the country is no longer in the same economic crisis it once faced.
According to internal sources, the IMF is employing a strategy to exert pressure and enforce its conditions before the elections. An IMF delegation is scheduled to arrive in Dhaka on October 29 to review the conditions related to the sixth installment. During this two-week visit, the team will meet with various government institutions and subsequently submit its assessment report to IMF headquarters, which will make the final decision regarding the disbursement of the installment. According to Bangladesh Bank sources, the country's foreign exchange reserves currently stand at $32. 14 billion.
