Bangladesh’s upcoming IMF loan tranches hang in limbo as stalled reforms in revenue collection and banking sector restructuring raise fresh doubts over the next $1.3 billion disbursement expected in June.

Bangladesh’s $5.5 billion loan programme with the International Monetary Fund is at a critical juncture, with the next tranche of approximately $1.3 billion now in serious doubt due to delays in implementing key reforms. Multiple sources within the country’s Ministry of Finance have indicated that without swift progress and a formal review mission, the upcoming disbursements could be postponed or even withheld. The IMF has repeatedly stressed that continued support hinges on tangible advancements in revenue mobilisation, banking sector stability, and overall macroeconomic discipline.

Since the programme’s approval in early 2023 – initially at $4.7 billion and later expanded to $5.5 billion – Bangladesh has received $3.64 billion across five tranches. The sixth tranche, originally slated for December, was deferred amid ongoing discussions. With $1.86 billion still remaining, the stakes are high for an economy grappling with high inflation, fragile reserves, and structural weaknesses exposed after the political transition in 2024.

Revenue Reforms Stuck in Limbo

A major sticking point is the stalled restructuring of the National Board of Revenue (NBR). The interim government had introduced the Revenue Policy and Revenue Management Ordinance, 2025, on 12 May last year to split policymaking from tax collection – a long-demanded reform aimed at curbing irregularities and boosting efficiency. The ordinance proposed creating two separate divisions under the NBR, based on recommendations from a committee headed by former NBR chairman Muhammad Abdul Mazid.

However, the current administration has yet to table the ordinance in parliament. If not placed before the House by the stipulated deadline, it risks lapsing entirely. Economists warn that maintaining the status quo – where policy formulation and implementation remain under one authority – perpetuates inefficiencies and hampers revenue growth. The IMF programme explicitly requires an increase in the tax-to-GDP ratio and a reduction in tax exemptions, targets that have already been missed by a wide margin.

Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh, emphasised the urgency: “In many countries around the world, revenue policy and revenue administration are handled by separate divisions, and such models have proven effective in increasing revenue collection.” He added that failure to separate these functions would allow irregularities to persist, widening the fiscal deficit and undermining budget implementation.

Banking Sector Reforms Face Reversal Concerns

Parallel concerns surround the Bank Resolution Ordinance, 2025, issued by the former interim government on 9 May to address capital shortfalls, insolvency, and distressed assets in the banking sector. The ordinance empowered Bangladesh Bank to initiate swift resolution measures, including mergers, share transfers, and temporary state control over weak banks. It was seen as a crucial step toward restoring stability in a sector plagued by undercapitalisation and non-performing loans.

The government has since formed a committee to amend the ordinance and convert it into a new law. Critics fear these revisions could dilute its original intent, potentially reopening doors for previous owners of troubled institutions and inviting legal challenges. A special committee has already recommended placing a revised version before parliament, but the process has introduced fresh uncertainty.

Former World Bank lead economist Dr Zahid Hussain noted: “The Bank Resolution Ordinance was introduced as part of banking sector reforms… It is essential that this ordinance is turned into law. Otherwise, previous owners may have the opportunity to go to court.” He cautioned that any backtracking could signal weakened commitment, complicating future IMF engagements.

Government Engages IMF Amid Tight Timelines

In late March, a high-level IMF delegation led by Krishna Srinivasan, director of the Asia and Pacific Department, visited Dhaka to assess progress. The team met Prime Minister Tarique Rahman, Finance and Planning Minister Amir Khasru Mahmud Chowdhury, and Bangladesh Bank Governor Md Mostaqur Rahman, seeking clarity on the new government’s reform roadmap. The IMF has requested a written, time-bound plan detailing how banking and revenue reforms will proceed.

Finance Minister Chowdhury has acknowledged that while many conditions have been met, “a few issues remain.” He indicated that final decisions would emerge from ongoing talks, including discussions at the World Bank-IMF Spring Meetings in Washington, DC (13-18 April). Bangladesh is also expected to seek an additional $2 billion in support to cushion external shocks from the Middle East conflict.

Yet analysts remain cautious. Dr Hussain warned that presenting one position at the Spring Meetings only to alter course during the national budget in June could stall the entire programme. “If additional financing is sought to deal with the ongoing crisis, it will likely come with stricter conditions,” he said.

Economic Risks and Broader Implications

The delays come at a precarious moment for Bangladesh’s economy. Weak revenue collection, a fragile banking sector, and persistently high inflation continue to strain public finances and investor confidence. Performance under the fifth review was described by the IMF as “mixed” or “uneven,” with revenue targets missed significantly despite meeting some fiscal and reserve-related benchmarks.

Selim Raihan, executive director of the South Asian Network on Economic Modelling (SANEM), described completing the programme as “extremely important.” He highlighted that other development partners closely monitor IMF assessments when deciding on their own support packages. A negative or lukewarm evaluation could complicate access to broader multilateral funding.

Global headwinds – including potential oil price spikes and disruptions in exports or remittances linked to Middle East tensions – could further pressure foreign exchange reserves. The IMF has urged consistent implementation of a market-based exchange rate regime, subsidy reductions, and risk-based supervision in banks to rebuild buffers.

IMF officials feel that without decisive action, Bangladesh risks not only losing the immediate $1.3 billion tranche but also jeopardising future disbursements and its broader reform credibility. The coming weeks, culminating in the June review, will test the government’s willingness to prioritise long-term structural changes over short-term political considerations.

For now, the upcoming IMF tranches remain in limbo – a stark reminder that economic recovery in Bangladesh depends as much on political will as on external financing.