After extended negotiations, Bangladesh and the International Monetary Fund (IMF) have reached a breakthrough, paving the way for the release of $1.3 billion in two installments under the ongoing $4.7 billion loan program. The funds are expected to be disbursed by June.
In a key development, Bangladesh Bank has agreed to adopt a more flexible exchange rate system for the US dollar, meeting a major IMF condition. Under the newly introduced “crawling peg” mechanism, the base exchange rate is set at Tk 119 per dollar, with a permissible fluctuation of up to 2.5%, capping the current dollar rate at Tk 123.
This flexibility was the main sticking point delaying the fourth installment of the IMF loan. So far, Bangladesh has received $2.31 billion since signing the agreement in January 2023. The remaining $2.39 billion had been on hold due to disagreements over exchange rate policy.
An IMF mission visited Dhaka in April to review the fourth and fifth tranches but failed to secure an agreement. The deadlock continued during the IMF-World Bank spring meetings in Washington. However, progress was made in follow-up virtual meetings on May 5 and 6, leading Bangladesh Bank to soften its stance and accept the IMF’s terms.
An official announcement from the IMF is expected soon. Bangladesh Bank Governor Dr. Ahsan H. Mansur is scheduled to hold a virtual press conference on Wednesday, where the decision may be formally confirmed.
