Bangladesh’s finance authorities are expressing cautious optimism that the International Monetary Fund (IMF) will release a stalled loan tranche along with the next scheduled one by June.

Finance Adviser Dr. Salehuddin Ahmed, speaking to reporters on Sunday after a meeting with IMF officials at the Secretariat, confirmed that the US$4.7 billion loan package’s fourth installment is still under discussion. Pending fulfillment of agreed conditions, the fourth and fifth tranches could be released together.

“The IMF is mainly focused on our revenue generation capacity, the size of the upcoming budget, and the deficit we expect,” Dr Ahmed said. He added that discussions also touched on a potential new law to tackle non-performing loans and broader governance issues within the banking sector.

The IMF team, currently in Dhaka, highlighted key areas for improvement, including increasing tax revenues, stabilizing the exchange rate, and narrowing the budget deficit. Discussions on macroeconomic indicators such as foreign exchange reserves and the exchange rate also featured prominently, with a follow-up meeting scheduled for April 19.

The IMF is expected to finalize its assessment in Washington before the next review, likely in May or June. Dr Ahmed stressed that the reform agenda must proceed independently of IMF requirements. “We are doing what is necessary—not because the IMF says so, but because it is vital for our economy,” he said.

Revenue reforms remain central to the IMF’s concerns. Dr Ahmed acknowledged weaknesses in the tax system, noting that many individuals file returns declaring zero income despite having earnings. He pointed to Nepal and Sri Lanka as outperformers in tax-to-GDP ratios, calling for Bangladesh to improve its standing.

While moving toward a single value-added tax (VAT) rate was discussed, the finance adviser stated that such a step was not immediately feasible.

In parallel, the IMF held a separate meeting with the Bangladesh Bank, where it reiterated concerns over the country’s managed floating exchange rate. IMF officials advised transitioning to a more market-driven system, a key condition tied to the loan.

Sources within the central bank said the IMF acknowledged recent improvements in net international reserves and the modernization of monetary policy. While the current policy rate stands at 10%, the IMF hinted that easing inflationary pressure could allow room for further flexibility in exchange rates and possible rate adjustments.

Bangladesh Bank Governor Dr Ahsan H. Mansur reportedly responded that inflation is easing due to prudent measures and that the exchange rate has remained stable for several months. He indicated that further flexibility could be considered once inflation aligns with projections.