The government of Bangladesh has formally decided to withdraw from its existing loan programme with the International Monetary Fund signed during the tenure of the previous Bangladesh Awami League government, and is preparing to negotiate a new loan package worth nearly $5 billion under revised conditions.
The policy shift was confirmed during a high-level virtual meeting held on May 21 between a Bangladeshi delegation led by Finance and Planning Minister Amir Khasru Mahmud Chowdhury and an IMF delegation headed by Deputy Managing Director Nigel Clarke.
In a statement issued by the Finance Ministry on Sunday, the government said the meeting discussed Bangladesh’s macroeconomic situation, the progress of the ongoing IMF programme, and future institutional cooperation.
During the meeting, the finance minister reaffirmed the government’s commitment to macroeconomic stability and structural reforms. However, he noted that the current IMF programme had been designed under a completely different political and economic context, making several conditions of the previous agreement difficult to implement under present realities.
He said the government does not intend to abandon reforms but wants to pursue a more realistic and phased reform agenda aligned with the country’s current economic and political conditions.
As part of the new approach, Bangladesh proposed launching a fresh IMF-supported programme under the newly elected government, with a three-year framework prioritising gradual implementation of key reforms.
Nigel Clarke welcomed Bangladesh’s new reform initiatives and the proposal for a revised loan arrangement, expressing hope for continued close and constructive cooperation between Bangladesh and the IMF in the future.
Senior officials at the Finance Ministry said the government decided to move away from the existing agreement after prolonged disagreements over several stringent IMF conditions.
According to officials, the IMF had been pressing for a uniform 15 percent VAT across sectors, withdrawal of various tax exemptions, and replacing universal subsidies on electricity and fertiliser with direct cash assistance programmes.
Development partners have also reportedly raised concerns over recent amendments to the Bank Resolution Act-2026, arguing that the changes signal setbacks in transparency and accountability.
The finance minister reportedly made it clear that, as an elected government, Bangladesh could not accept conditions that contradict public interest or its electoral commitments.
Despite the decision to exit the old programme, officials stressed that maintaining an IMF programme remains critically important for Bangladesh, as it serves as a symbol of international financial credibility and helps unlock an additional $3–4 billion annually in budget support from development partners including the World Bank and the Asian Development Bank.
Government sources said an IMF delegation may visit Dhaka in July or August to finalise the amount, duration, and conditions of the proposed new loan programme.
