Bangladesh Faces Delays in Indian LoC Projects

Bangladesh's foreign-exchange reserves are set to increase with the World Bank (WB) likely to confirm $500 million in budget support next week. The agreement is expected to be signed on December 22, pending WB board approval.

The IMF has set key reform conditions for Bangladesh to secure an additional $750 million loan alongside the fourth tranche of its $4.7 billion program. These include separating tax policy from administration, reducing tax exemptions, adopting greater exchange rate flexibility, and addressing issues in distressed banks.

The IMF will disburse $645 million to Bangladesh as part of its $4.7 billion loan program, raising total disbursements to $2.31 billion, while a request for an additional $750 million remains under review. Amid macroeconomic challenges including slow economic activity, high inflation, capital outflows, and declining tax revenues, the IMF projects GDP growth to slow to 3.8 percent in FY25 before rebounding to 6.7 percent in FY26.

The interim government will abolish the rule canceling tenders with bids exceeding 10% of the estimated price to combat corruption, dismantle syndicates, and promote fair competition in public procurement. This decision, announced during a meeting chaired by Planning Adviser Wahiduddin Mahmud, aligns with World Bank conditions for budget support and aims to encourage new bidders.

The Planning Ministry's taskforce on sustainable development, led by KAS Murshid, former director general of BIDS, has drafted a report addressing economic challenges outlined in the recently published white paper. The report includes short and mid-term recommendations for achieving economic stability and moderate growth, set to be presented this month.