Private Sector Credit Growth Slows to 9.8% in June 2024

Bangladesh is seeking a $6 billion budget support package from international lenders. The Ministry of Finance (MoF) aims to secure $1 billion each from the World Bank, the Asian Development Bank, and the Japan International Cooperation Agency, with an additional $3 billion requested from the IMF. The proposal letter has been sent following preliminary discussions, and formal negotiations are expected to begin soon.

The newly formed committee for the "White Paper on the State of Bangladesh Economy," led by Dr. Debapriya Bhattacharya, is set to review and analyze foreign loan agreements, with a focus on those related to the energy sector. Dr. Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue, emphasized that the committee will evaluate these agreements and scrutinize available data against international standards. The committee aims to address a broad range of economic issues, including banking, resource mobilization, revenue collection, and poverty alleviation. They plan to consult with stakeholders and experts in various fields, both locally and internationally. The committee has allocated tasks among its members and intends to produce a comprehensive report within the next two months. 

Bangladesh is set to seek financial assistance from the US during talks with a US delegation arriving in Dhaka on September 15. The delegation, led by the US Assistant Secretary of State and including the acting Assistant Secretary of the Treasury for International Finance and Development, will meet with Bangladesh’s chief adviser, finance adviser, and foreign adviser.

The IMF is considering an additional $3 billion loan to Bangladesh but seeks clarity on the government's reform plans, particularly regarding tax policy. This was discussed in a meeting between Finance Adviser Salehuddin Ahmed and the IMF, led by Chris Papageorgiou. The IMF is focused on whether Bangladesh will increase its tax-to-GDP ratio.

In FY24, the government's domestic borrowing fell significantly short of its annual target due to Bangladesh Bank's tighter monetary policy aimed at controlling inflation.  The central bank reduced its share of government treasuries by 4 percentage points to 23% in FY24.

IMF Mission Chief Chris Papageorgiou has confirmed that the request for additional loans will be reviewed following a Zoom meeting with Bangladesh’s finance adviser, Md Khairuzzaman Mozumder, and IMF resident representative Jayendu De. The finance adviser sought extra budgetary support beyond the existing $4.7 billion loan agreement but did not specify an amount.