ASIATODAY.ID, DHAKA — Bangladesh has made progress in safeguarding macroeconomic stability, but the country continues to confront serious challenges including weak tax revenues, financial sector vulnerabilities, and persistently high inflation.
These findings were highlighted in the IMF End-of-Mission Statement following the 2025 Article IV Consultation and the fifth review of the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).
The IMF mission, led by Chris Papageorgiou, visited Dhaka from October 29 to November 13, 2025.
Growth Slows, Inflation Remains Elevated
According to the IMF, Bangladesh’s economic growth slowed to 3.7% in FY25, down from 4.2% in FY24, as the economy was hit by production disruptions during the recent uprising, a tighter policy stance, and increased uncertainty.
Although inflation decreased from double-digit levels earlier in FY2025, it remained elevated at 8.2% (y-o-y) in October.
IMF: Tax and Banking Reforms Are Urgently Needed
The IMF welcomed recent efforts to tighten fiscal and monetary policy and noted that foreign exchange reserves have begun to recover following the May exchange rate reform.
However, the Fund stressed that ambitious tax reforms and decisive action to fix the banking sector are crucial to restore growth and stabilize the economy.
Key IMF recommendations include:
Eliminating reduced VAT rates and streamlining tax exemptions, except for essential goods and services.
Raising the minimum turnover tax rate for all corporations.
Strengthening tax administration and improving public financial management.
Developing a national strategy to address weak banks, including estimating system-wide capital needs, determining fiscal support, and outlining credible restructuring options.
Expanding Asset Quality Reviews to all systemically important banks, including state-owned banks.
IMF cautioned that delayed or insufficient reform efforts could weaken growth, fuel inflation, and heighten macro-financial instability.
Economic Outlook: Gradual Recovery Expected
With consistent policy implementation, the IMF projects:
Economic growth to rise to nearly 5% in FY26 and FY27.
Inflation to ease from 8.8% in FY26 to 5.5% in FY27.
However, downside risks remain significant if reforms are not carried out in a timely manner.
Monetary Policy Must Stay Tight
The IMF emphasized that Bangladesh should maintain tight monetary conditions until inflation falls within the 5–6% target range.
The Fund also called for:
Full implementation of the more flexible exchange rate regime.
Phasing out non-standard monetary and quasi-fiscal operations.
Structural Reforms to Unlock Growth
Bangladesh was praised for ongoing efforts to enhance governance at the central bank and in the fiscal sector. Yet further steps are needed to:
Strengthen anti-corruption measures.
Improve the AML/CFT framework.
Enhance job creation, particularly for youth.
Diversify exports to build a more resilient economy.
Improving macroeconomic data quality and analytical capacity will also support stronger policymaking.
Climate Resilience Remains a Priority
Under the RSF program, Bangladesh has advanced efforts to strengthen climate risk management and make infrastructure more resilient to climate shocks.
However, the IMF stressed that more climate finance is urgently needed to close the significant funding gap.
IMF Reaffirms Commitment to Bangladesh
The IMF will continue discussions on the fifth program review and reaffirmed its commitment to supporting Bangladesh’s pursuit of macroeconomic stabilization and inclusive growth.
During the mission, IMF staff met with:
Finance Advisor S. Ahmed
Bangladesh Bank Governor A. Mansur
Finance Secretary Md K. Mozumder
NBR Chairman Md AR Khan
Representatives from the private sector, international partners, and think tanks.
(AT Network)
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