Washington, DC: An International Monetary Fund (IMF) mission team led by Mr. Chris Papageorgiou visited Dhaka during April 6–17, 2025 to discuss economic and financial policies in the context of the combined third and fourth review of the IMF's Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).
At the end of the mission, Mr. Papageorgiou issued the following statement:
"The Bangladeshi economy continues to face multiple challenges amidst elevated global uncertainty. GDP growth fell to 3.3 percent (year-on-year, y-o-y) in the first half of FY25, down from 5.1 percent in the same period of FY24, reflecting economic disruptions caused by the popular uprising, a tighter policy mix, and heightened uncertainty that weighed on investment. After peaking at a decade-high of 11.7 percent in July 2024, headline inflation eased to 9.4 percent (y-o-y) in March 2025 but remains well above Bangladesh Bank's (BB's) target range of 5–6 percent.
"To address the mounting external financing gap and ensure a continued decline in inflation, near-term policy tightening remains essential. Fiscal consolidation should prioritize the swift implementation of tax policy reform to remove extensive tax preferential treatments and simplify the tax system. Carefully calibrating the monetary stance to avoid its premature softening will help anchor inflation expectations, while greater exchange rate flexibility will support price competitiveness, rebuild foreign exchange reserve buffers, and strengthen the economy's resilience against external shocks.
"A comprehensive strategy to boost revenue and reform expenditures is crucial for supporting increased social spending and infrastructure investment. Bangladesh's persistently low tax-to-GDP ratio underscores the pressing need for tax reforms aimed at building a more equitable, transparent and streamlined system—one that ensures sustainable revenue growth, reduces widespread tax exemptions, improves compliance, and distinctly separates tax policy from administration.
"Thorough, and well-sequenced financial sector reforms are essential for maintaining stability. Legal reforms should align with international standards, and the authorities must move quickly to operationalize new frameworks that enable orderly bank restructuring while protecting small depositors. Effective asset quality reviews (AQRs) strengthened risk-based supervision, and improved governance and transparency will be critical to restoring confidence and supporting the sector's health. Simultaneously, institutional reforms to enhance Bangladesh Bank's (BB's) independence and governance will be critical for maintaining long-term macroeconomic and financial stability and for the successful implementation of financial sector reforms.
"Sustaining the pace of structural reforms is crucial for tackling the country's economic challenges. Improving governance and increasing transparency will play a vital role in creating a more favorable investment environment, boosting foreign direct investment (FDI), and expanding export sectors beyond ready-made garments. Progress in AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) risk assessments and enhancements in data quality are equally important.
"Enhancing resilience to climate change is key for mitigating macroeconomic and fiscal risks. Improving institutional capacity and ensuring more efficient use of resources will support progress toward climate objectives. The government should prioritize climate-responsive fiscal reforms and direct investments toward sustainable, resilient infrastructure. In addition, effectively managing climate-related risks will help safeguard financial sector stability.
"Discussions are continuing with the objective of reaching a staff-level agreement in the near term—including during the April 2025 IMF-World Bank Spring Meetings in Washington, DC— to pave the way for the completion of the combined third and fourth program review. We reaffirm our commitment to support Bangladesh and its people at this challenging period.
"The IMF team is grateful to the Bangladesh authorities and other stakeholders for their hospitality and candid discussions. The team held meetings with Finance Advisor S. Ahmed, Special Envoy to the Chief Adviser L. Siddiqui, Bangladesh Bank Governor A. Mansur, Finance Secretary Md K. Mozumder, Chairman of the National Board of Revenue Md AR Khan, and other senior officials. The team also met with representatives from the private sector, think tanks, foreign donors, and international development partners."
