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interim government, taking the total to $5.5 billion.

Bangladesh has so far received $3.8 billion in five tranches. The sixth tranche remained pending after the IMF suspended discussions in November and decided to resume talks with the new government following the election.

Under the previous schedule, the fifth and sixth tranches, together worth $1.3 billion, were due by June this year, while the final tranche was expected in December.

Discussions on a replacement programme began during the IMF-World Bank Spring Meetings in April, when the Bangladesh delegation led by the finance minister held talks with IMF officials in Washington, DC. The IMF signalled during the Spring Meetings that no further tranches would be released without visible progress on economic reforms.

Since then, virtual discussions have continued every week over the proposed loan amount and reform conditions.

Finance ministry officials said the BNP-led government had reservations about continuing the programme from the outset, partly because it was initiated under the Awami League government and because many of its conditions are difficult to implement under current economic conditions.

Maintaining the programme would require Bangladesh to meet several stringent conditions within the next six months, a target the government considers unrealistic amid global and domestic economic pressures. A new programme, officials said, would allow reforms to be implemented gradually.

Speaking to reporters after returning from Washington in April, Khosru said the IMF programme had been negotiated under the previous “unelected” Awami League government and included conditions the BNP government may not accept.

“We are an elected government. We will not accept any condition that goes against public interest. This programme will end in six to seven months, after which we will decide whether to continue further,” he said.

Officials said key areas of disagreement include introducing a single VAT rate, reducing tax exemptions, adopting a fully market-based exchange rate, cutting power and fertiliser subsidies, and implementing reforms in the banking sector and the National Board of Revenue.

Despite the disagreements, officials said Bangladesh still needs an active IMF programme because it serves as a “seal of approval” for international lenders and investors, helping unlock financing from other development partners.

According to finance ministry officials, the government will require $3 billion to $4 billion annually in budget support to finance large upcoming budgets and fulfil electoral commitments. Securing at least $1 billion a year from the IMF would help attract further support from lenders such as the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank and the Japan International Cooperation Agency.

At the end of an IMF mission in November last year, mission chief Chris Papageorgiou warned that Bangladesh faced “significant macro-financial challenges stemming from weak tax revenue and undercapitalisation in the financial sector”.

He said delayed or inadequate policy action could weaken growth, raise inflation and increase risks to macro-financial stability.

The IMF also called for ambitious tax reforms, including eliminating reduced VAT rates and exemptions except on essential goods and services, increasing the minimum turnover tax for corporations, containing subsidies at fiscally sustainable levels, and accelerating reforms in the banking sector.

The lender further stressed the need for stronger monetary policy to curb inflation, greater exchange-rate flexibility, and measures to improve banks’ governance, transparency and recovery of non-performing loans.