IMF Executive Board Concludes 2025 Article IV Consultation with Bangladesh
IMF News, January 30, 2026
Source details
- Canonical URL
- IMF Executive Board Concludes 2025 Article IV Consultation with Bangladesh
Other formats
Bibliographic details
- Published: January 30, 2026
Overview
- The Executive Board completed the Article IV Consultation for Bangladesh on January 26, 2026.
- The authorities consented to publication of the Staff Report prepared for this consultation.
- Following a recent economic slowdown, GDP growth is expected to rebound to 4.7 percent in FY26 and FY27.
- The economy faces mounting macro-financial challenges from weak tax revenue and financial sector vulnerabilities, with significant downside risks from delays in implementing fiscal and financial reforms.
- Policy focus recommended: safeguarding fiscal sustainability, strengthening macro-financial stability, and implementing comprehensive structural reforms over the medium-term to strengthen governance, create jobs, and promote economic diversification.
Macroeconomic developments (recent and FY25)
- GDP growth decelerated to 3.7 percent in FY25 from 4.2 percent in FY24 and 5.8 percent in FY23.
- Headline inflation fell from double-digit levels in early FY25 but remained elevated at 8.2 percent (y-o-y) in October.
- Tax revenue to GDP ratio fell sharply in FY25.
- Fiscal deficit was contained due to under-execution of capital and social spending.
- Foreign exchange reserves have begun to rebuild, supported by improvements in the current account.
Outlook and risks
- With implementation of policies to mobilize tax revenue and address financial sector vulnerabilities:
- Growth projected to rebound to 4.7 percent in FY26 and gradually accelerate to around 6 percent over the medium term.
- Inflation projected to remain elevated at 8.9 percent in FY26 before subsiding to around 6 percent in FY27.
- Risks to the outlook are tilted to the downside, mainly from delayed or inadequate policy action and reversals of exchange rate reform and fiscal discipline.
Executive Board Assessment (summary of Directors’ views)
- Acknowledged interim authorities’ efforts to stabilize the economy following the 2024 uprising and ahead of upcoming national elections.
- Noted mounting macroeconomic and financial challenges: weak revenue mobilization, banking sector vulnerabilities, incomplete implementation of the new exchange rate framework, and elevated inflation.
- Emphasized need for decisive and sustained policy actions and bold reforms to restore macroeconomic and financial stability and support long-term development goals.
- Stressed the importance of the new administration’s full ownership of the program, supported by early and active engagement with IMF staff and efforts to secure stakeholder buy-in.
Key policy recommendations (directors’ priorities)
- Fiscal policy and revenue mobilization:
- Undertake bold tax policy reforms, simplify the tax system, and strengthen tax administration and compliance to mobilize revenue.
- Rationalize subsidies, prioritize growth-enhancing investments, enhance social safety nets, and improve public financial and investment management.
- Strengthen financial viability of energy SOEs.
- Financial sector and banking reforms:
- Develop a credible banking sector reform strategy consistent with international standards, including estimates of undercapitalization, definition of fiscal support, and legally robust restructuring and resolution plans.
- Conduct asset quality reviews for all systemic and state-owned banks, advance risk-based supervision, and strengthen governance and balance sheet transparency.
- Caution against unsecured liquidity injections into weak banks.
- Monetary and exchange rate policy:
- Maintain a tight policy mix to continue rebuilding foreign reserves and reducing inflation.
- Fully and consistently implement the exchange rate reform and allow greater exchange rate flexibility.
- Keep monetary policy appropriately tight until inflation is firmly on a downward path; continue modernization of the monetary policy framework.
- Structural and governance reforms:
- Enhance governance and transparency, strengthen anti-corruption and AML/CFT frameworks, and ensure central bank autonomy.
- Support job creation, particularly for youth, and export diversification.
- Continue capacity development and improvements in macroeconomic statistics.
- Continue implementation of reforms under the RSF arrangement to help build climate resilience and mobilize climate finance.
Selected Economic Indicators, FY2025–27 (high-level figures from Staff projections)
- Real GDP: FY25 Act. 3.7 ; FY26 Proj. 4.7 ; FY27 Proj. (around) 6 percent over the medium term (projection narrative).
- Consumption:
- Private: FY25 Act. 10.2 ; FY26 Proj. 2.9 ; FY27 Proj. 4.5
- Public: FY25 Act. -6.8 ; FY26 Proj. 15.0 ; FY27 Proj. 12.3
- Gross Capital Formation: FY25 Act. -8.0 ; FY26 Proj. 8.2 ; FY27 Proj. 4.9
- Trade (percent changes):
- Exports of goods and services: FY25 Act. 0.9 ; FY26 Proj. 2.3 ; FY27 Proj. 5.3
- Imports of goods and services: FY25 Act. -39.3 ; FY26 Proj. 42.5 ; FY27 Proj. 3.3
- Prices:
- GDP deflator: FY25 Act. 5.6 ; FY26 Proj. 13.6 ; FY27 Proj. 11.7 (note: entries reflect table layout in source)
- CPI inflation (annual average): FY25 Act. 10.0 ; FY26 Proj. 8.9 ; FY27 Proj. 6.0
- CPI inflation (end of period): FY25 Act. 8.5 ; FY26 Proj. 5.5
- Central government operations (in percent of GDP):
- Total revenue and grants: FY25 Act. 8.0 ; FY26 Proj. 10.3
- Of which: Tax revenue: FY25 Act. 6.9 ; FY26 Proj. 7.2 ; FY27 Proj. 9.3
- Total expenditure: FY25 Act. 10.9 ; FY26 Proj. 12.6
- Of which: Annual Development Program (ADP): FY25 Act. 3.4
- Overall balance (including grants): FY25 Act. -2.9 ; FY26 Proj. -4.3 ; FY27 Proj. -4.7
- (excluding grants): FY25 Act. -3.0 ; FY26 Proj. -4.4
- Primary balance (including grants): FY25 Act. -0.7 ; FY26 Proj. -2.0 ; FY27 Proj. -2.2
- Public sector total debt:
- FY25 Act. 42.1 ; FY26 Proj. 42.4 ; FY27 Proj. 43.4
- Of which: External debt: FY25 Act. 19.5 ; FY26 Proj. 19.2 ; FY27 Proj. 18.8
- Balance of Payments (in percent of GDP):
- Current account balance: FY25 Act. 0.0 ; FY26 Proj. -0.3 ; FY27 Proj. -0.6
- Trade balance: FY25 Act. -5.6 ; FY26 Proj. -5.5 ; FY27 Proj. -5.8
- Capital account balance: FY25 Act. 0.1
- Financial account balance: FY25 Act. 0.8 ; FY26 Proj. 0.7 ; FY27 Proj. 1.3
- Foreign direct investment, net: FY25 Act. 0.4 ; FY26 Proj. 0.3 ; FY27 Proj. 0.5
- Gross international reserves (billions of U.S. dollars): FY25 Act. 26.8 ; FY26 Proj. 30.9 ; FY27 Proj. 35.8
- in months of next year's imports: FY25 Act. 3.8 ; FY26 Proj. 3.9 ; FY27 Proj. 4.0
- Monetary and Credit (in percent of GDP):
- Reserve money: FY25 Act. 7.5 ; FY26 Proj. 7.7 ; FY27 Proj. 8.1
- Broad money (M2): FY25 Act. 46.5 ; FY26 Proj. 45.6 ; FY27 Proj. 45.8
- Credit to private sector: FY25 Act. 33.2 ; FY26 Proj. 31.0 ; FY27 Proj. 30.1
- Credit to private sector (percent change): FY25 Act. 7.9
- Savings and Investment (in percent of GDP):
- Gross national savings: FY25 Act. 28.2 ; FY26 Proj. 27.9 ; FY27 Proj. 28.4
- Gross investment: FY25 Act. 28.5 ; FY26 Proj. 24.1 ; FY27 Proj. 23.0
- Memorandum item:
- Nominal GDP (in billions of taka): FY25 Act. 55,029 ; FY26 Proj. 62,637 ; FY27 Proj. 69,533
Source: IMF Executive Board Concludes 2025 Article IV Consultation with Bangladesh, January 30, 2026.