International Monetary Fund Executive Board concludes Bangladesh Article IV and projects GDP growth rebound to 4.7 percent while urging bold fiscal and banking reforms

The International Monetary Fund Executive Board concluded the 2025 Article IV consultation with Bangladesh and published the related staff report with the authorities’ consent. It expects GDP growth to rebound to 4.7 percent in FY26 and FY27 but warned that mounting macro-financial challenges and significant downside risks could intensify if implementation of fiscal, financial sector and exchange rate reforms is delayed. Recent activity has slowed and inflation has remained elevated, with FY25 growth at 3.7 percent and headline inflation at 8.2 percent year on year in October, while the tax revenue-to-GDP ratio fell sharply and banking sector vulnerabilities persist alongside incomplete implementation of the new exchange rate framework. The Board pressed for ambitious revenue mobilization through tax policy and administration reforms, subsidy rationalization and better public financial and investment management, and called for a credible banking sector reform strategy aligned with international standards, including estimates of undercapitalization, legally robust restructuring and resolution plans, and asset quality reviews for all systemic and state-owned banks. It also supported a tight policy mix to rebuild reserves and reduce inflation, full and consistent exchange rate reform with greater flexibility, continued modernization of the monetary policy framework, and broader structural measures including stronger governance, anti-corruption and AML/CFT frameworks, and central bank autonomy.