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Negotiations between the government and the International Monetary Fund (IMF) have stalled without consensus over stringent reform conditionalities and revenue targets. Amid domestic political transitions and global economic volatility, the previous loan program has been cancelled, paving the way for fresh discussions surrounding an alternative $4.5 billion assistance package.
Finance Minister Amir Khosru Mahmud Chowdhury stated on Sunday (October 4) that the government will not accept external financial aid tied to rigid conditionalities from the IMF and World Bank, confirming that the earlier facility was scrapped due to unacceptable terms.
According to finance ministry sources, the previous $4.7 billion credit line arranged under the Sheikh Hasina administration was subsequently augmented to $5.5 billion during the interim government. Although $3.64 billion of the total was disbursed, the IMF withheld remaining tranches due to shortfalls in domestic revenue generation and fiscal reform implementation.
Following the formation of the government led by Tarique Rahman, talks commenced on a new $4.5 billion package. Manjurul Haque, Joint Secretary of the Macroeconomic Wing at the Finance Ministry, indicated that final determinations hinge on conditional terms. In Washington, Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, urged the government to leverage its strong mandate to mobilize domestic revenues, enforce a uniform 15 percent VAT rate, withdraw tax exemptions, and restructure the banking system. The government countered that, as an elected administration, it cannot impose policies conflicting with public welfare or its electoral manifesto.
Dr. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, noted that core IMF benchmarks centered on enhancing the tax-to-GDP ratio and fiscal governance, where tangible progress lagged. Rashed Al Mahmud Titumir, Adviser to the Prime Minister on Finance and Planning, remarked that discussions continue while safeguarding national interests, adding that recapitalization and domestic revenue growth are being accelerated independently, having uncovered hidden non-performing loans (NPLs) of 35.72 percent in the banking sector.
