IMF says new Bangladesh programme talks ahead, sees growth slowing

DHAKA, July 16 (Reuters) - The International ‌Monetary Fund said ​on Thursday ​that its staff team had concluded a visit to Bangladesh at the government's request and that discussions on the parameters of a new arrangement would ‌take place in the coming months.

IMF staff project Bangladesh's economic growth will ⁠moderate to 3.5% in fiscal 2027 and weaken further to below 3% over the medium term, according to ‌a statement issued at the end ‌of the July 12 to 16 visit to Dhaka.

The South Asian country is seeking a replacement for its $5.5 billion IMF bailout programme after the government of Prime Minister ​Tarique Rahman, which took office in February following elections, opted to exit the earlier arrangement, saying some of its conditions did not align with the country's priorities.

Finance Minister Amir ⁠Khosru Mahmud Chowdhury said on Monday that Bangladesh and the IMF had agreed on a broad framework for a new ​programme, with reforms to be implemented in phases to reflect challenging economic conditions.

The IMF said Bangladesh continues to face significant fiscal, financial and ​inflationary pressures, compounded by the conflict in the Middle ‌East. Higher global commodity prices and supply disruptions have renewed inflationary pressures, raised import and subsidy costs and added to strains on the ⁠economy, while stress in the banking sector remains elevated.

The lender said stronger revenue mobilisation and subsidy rationalisation were needed to create fiscal space for priority social and development spending. It also recommended maintaining tight ⁠monetary and prudent fiscal policies to reduce inflation and rebuild foreign exchange reserves.

The IMF added that consistent ​implementation of the crawling peg exchange-rate regime adopted in 2025 would enhance exchange-rate flexibility and support external stability, while banking-sector restructuring should be anchored in a credible and comprehensive strategy.

Bangladesh entered the IMF programme ‌in 2023 during a severe foreign exchange crisis under then Prime Minister Sheikh Hasina and has so far received about $3.8 billion of the ‌approved funds.

The government is also seeking financing from the World Bank and the Asian Development Bank ⁠as persistent inflation, slowing growth, pressure ‌on foreign exchange reserves and ​higher energy import costs linked to the Middle East conflict weigh on the economy.

(Reporting by Ruma Paul and Tanvi Mehta; Editing by YP Rajesh and ‌Philippa Fletcher)

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