IMF satisfied with BD’s macroeconomic performance

The International Monetary Fund (IMF) has expressed satisfaction with the recent improvements in Bangladesh's macroeconomic performance.

“Bangladesh is seeing a very good progress in sense of recovery and macroeconomic stability since the uprising last summer. The interim government led by the chief adviser, financial adviser and governor should be praised for the progress,” said IMF Mission Chief Chris Papageorgiou.

He said this at a press conference at the Bangladesh Bank headquarters in the city.

An IMF mission team led by Chris Papageorgiou visited in the city during April 6–17, 2025 to discuss economic and financial policies in the context of the combined third and fourth review of the IMF’s Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).

At the press conference, Chris Papageorgiou said Bangladeshi economy continues to face multiple challenges amidst elevated global uncertainty.

“After peaking at a decade-high of 11.7 percent in July 2024, headline inflation eased to 9.4 percent (y-o-y) in March 2025 but remains well above Bangladesh Bank’s (BB’s) target range of 5–6 percent,” he added.

To address the mounting external financing gap and ensure a continued decline in inflation, he said, near-term policy tightening remains essential.

Fiscal consolidation should prioritize the swift implementation of tax policy reform to remove extensive tax preferential treatments and simplify the tax system, he added.

He said, “Carefully calibrating the monetary stance to avoid its premature softening will help anchor inflation expectations, while greater exchange rate flexibility will support price competitiveness, rebuild foreign exchange reserve buffers, and strengthen the economy’s resilience against external shocks.”

He mentioned that a comprehensive strategy to boost revenue and reform expenditures is crucial for supporting increased social spending and infrastructure investment.

“Bangladesh’s persistently low tax-to-GDP ratio underscores the pressing need for tax reforms aimed at building a more equitable, transparent and streamlined system—one that ensures sustainable revenue growth, reduces widespread tax exemptions, improves compliance, and distinctly separates tax policy from administration,” he added.

Papageorgiou said thorough, and well-sequenced financial sector reforms are essential for maintaining stability, reports BSS.

“Legal reforms should align with international standards, and the authorities must move quickly to operationalize new frameworks that enable orderly bank restructuring while protecting small depositors.

 Effective asset quality reviews (AQRs) strengthened risk-based supervision, and improved governance and transparency will be critical to restoring confidence and supporting the sector’s health. Simultaneously, institutional reforms to enhance Bangladesh Bank’s (BB’s) independence and governance will be critical for maintaining long-term macroeconomic and financial stability and for the successful implementation of financial sector reforms,” he added.

He said, “Sustaining the pace of structural reforms is crucial for tackling the country’s economic challenges. Improving governance and increasing transparency will play a vital role in creating a more favorable investment environment, boosting foreign direct investment (FDI), and expanding export sectors beyond ready-made garments. Progress in AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) risk assessments and enhancements in data quality are equally important.”

“Enhancing resilience to climate change is key for mitigating macroeconomic and fiscal risks. Improving institutional capacity and ensuring more efficient use of resources will support progress toward climate objectives. The government should prioritize climate-responsive fiscal reforms and direct investments toward sustainable, resilient infrastructure. In addition, effectively managing climate-related risks will help safeguard financial sector stability,” he added.

He said, “Discussions are continuing with the objective of reaching a staff-level agreement in the near term—including during the April 2025 IMF-World Bank Spring Meetings in Washington, DC— to pave the way for the completion of the combined third and fourth program review. We reaffirm our commitment to support Bangladesh and its people at this challenging period.”