The International Monetary Fund (IMF) has agreed to release $1.3 billion in June to Bangladesh, marking a major breakthrough after months of stalled negotiations over exchange rate reform.
The upcoming disbursement, comprising the fourth and fifth tranches of a $4.7 billion loan package, had been delayed due to disagreements over the adoption of a more flexible and market-based exchange rate regime.
“We have agreed with the IMF to adopt a more flexible exchange rate system,” said Finance Adviser Dr. Salehuddin Ahmed on Tuesday following a meeting of the Advisory Council Committee on Government Purchase.
A senior official from Bangladesh Bank also confirmed the agreement, noting that the IMF has endorsed the central bank’s revised approach, which incorporates a crawling peg mechanism — a managed exchange rate system allowing gradual currency adjustments.
An official announcement detailing the agreement will be made at a press conference on Wednesday. Bangladesh Bank Governor Ahsan H Mansur is expected to join virtually from Dubai, according to central bank sources.
The IMF has long advocated for a unified, market-determined exchange rate and had urged Bangladesh to eliminate multiple exchange rate windows. While Bangladesh Bank resisted a full float citing inflationary and political concerns, the new compromise appears to have satisfied both parties by introducing greater flexibility while maintaining some regulatory oversight.
The agreement comes on the heels of an IMF staff mission visit in April, led by Chris Papageorgiou, which assessed Bangladesh’s progress under the Extended Fund Facility (EFF), Extended Credit Facility (ECF), and the Resilience and Sustainability Facility (RSF).
So far, Bangladesh has received $2.3 billion under the IMF loan package, approved in early 2023. Disbursement of the fourth tranche, worth $645 million, was delayed in February due to unmet reform milestones. In response, both sides agreed to combine the fourth and fifth instalments for release in the 2024–25 fiscal year.
Following the successful program review in April and pending formal approval by the IMF Executive Board in June, the $1.3 billion disbursement is expected to boost foreign currency reserves and ease pressure on the country’s balance of payments.