Dhaka: The International Monetary Fund (IMF) today observed that Bangladesh authorities have made progress in maintaining macroeconomic stability and advancing reforms.
According to Bangladesh Sangbad Sangstha, an IMF mission team led by Chris Papageorgiou visited the city during October 29-November 13, 2025, to discuss economic and financial policies in the context of the 2025 Article IV consultation and the fifth review of the IMF’s Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF).
In his speech, Papageorgiou noted that headline inflation fell from double-digit levels in early FY2025 but remained elevated at 8.2 percent year-on-year in October. However, he emphasized that the economy continues to face significant macro-financial challenges due to weak tax revenue and undercapitalization in the financial sector.
Addressing these challenges, Papageorgiou highlighted that reforming the tax system is essential to create a simple and fair taxation environment and tackle financial sector vulnerabilities. With consistent implementation of these policies, GDP growth is projected to accelerate to nearly 5 percent in FY26 and FY27, with inflation expected to decline to 5.5 percent in FY27. However, he warned that delayed or inadequate policy action could weaken growth, raise inflation, and increase risks to macro-financial stability.
Papageorgiou stressed the importance of ambitious tax reform in the near term to generate necessary revenues for higher social spending and infrastructure investment. Potential options include eliminating reduced VAT rates and removing exemptions for non-essential goods and services while increasing the minimum turnover tax rate for all corporations. These reforms should be complemented by efforts to strengthen tax administration and improve public financial and investment management.
He also remarked on the need for financial sector reforms to address banking sector challenges. A comprehensive government strategy should include estimates of system-wide undercapitalization, fiscal support, and legally robust restructuring and resolution options. Papageorgiou emphasized that asset quality reviews should be expanded to all systemically important and state-owned banks, with continued efforts to improve governance, transparency, and frameworks for recovering non-performing loans.
Papageorgiou advised that monetary policy should continue focusing on reducing inflation, maintaining tight conditions until it returns to the target range of 5-6 percent. He also recommended that the new exchange rate regime be fully implemented to foster increased flexibility and improve monetary policy effectiveness.
Further structural reforms are necessary to unlock economic potential and achieve inclusive growth. The IMF mission chief acknowledged progress in improving governance of the central bank and the fiscal sector, with ongoing efforts to strengthen anti-corruption measures and the AML/CFT framework.
Papageorgiou stressed that policies fostering job creation, especially among the youth, and promoting export diversification are critical for Bangladesh’s transition to a more resilient growth model. He emphasized the importance of building climate resilience and mobilizing climate finance, noting significant progress under the RSF with ongoing reforms aimed at making infrastructure resilient against climate shocks.
He concluded by stating that discussions on the fifth review of the IMF-supported program will continue, with the Fund remaining a committed partner to Bangladesh in the quest for sustained macroeconomic stabilization and strong growth. The IMF team expressed gratitude to the Bangladesh authorities and other stakeholders for their hospitality and candid discussions, highlighting meetings with various senior officials and representatives from different sectors.