The International Monetary Fund (IMF) has approved the release of $1.3 billion in two pending loan tranches for Bangladesh, ending months of uncertainty over unmet reform conditions tied to its $4.7 billion lending package.

Finance Division officials confirmed that the IMF Executive Board gave the green light following a prolonged deadlock over policy compliance, particularly in revenue mobilisation and exchange rate flexibility.

The decision comes after a staff-level agreement was reached in mid-May, following extensive discussions between IMF staff and Bangladeshi authorities.

The approval covers the third and fourth reviews of the loan programme, previously stalled due to Dhaka’s reluctance to adopt a market-based exchange rate and commit to more ambitious tax revenue targets.

In April, the IMF team, led by Mission Chief Chris Papageorgiou, visited Dhaka but failed to secure an agreement, citing policy divergences. Talks resumed during the IMF-World Bank Spring Meetings in Washington and continued virtually.

The breakthrough came when Bangladesh Bank, under Governor Dr Ahsan H Mansur, agreed to implement a market-driven exchange rate regime.

The IMF’s May 14 statement confirmed a staff-level deal, contingent on reforms being implemented. With the Executive Board’s latest approval, Bangladesh is now set to receive much-needed foreign exchange support amid fiscal and external pressures.

This disbursement is expected to strengthen reserves, support macroeconomic stability, and reinforce the government’s reform momentum ahead of FY2025-26.