&w=3840&q=100)
IMF tightens terms, disburses $1.3 bn as Bangladesh faces steeper repayment obligations
A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., U.S. File image/ Reuters
Days after approving a loan for Bangladesh worth $1.3 billion, the International Monetary Fund on Friday set out new conditions for the country for its $5.5 billion lending programme.
Earlier this week, the international lender approved $1.3 billion disbursement of the third and fourth tranches of Bangladesh's loan programme. A press release by the IMF said that the amount had been deposited into the country's account yesterday.
Bangladesh's economic woes began after former prime minister Sheikh Hasina's ouster from the country last year, which led an interim government to take over under Chief Advisor Muhammad Yunus. However, not much changed in terms of economic outlook owing to persistent political instability, continuation of a tighter policy mix, rising trade barriers, and increasing stress in the banking sector.
STORY CONTINUES BELOW THIS AD
What are the new conditions set by IMF?
According to the updated terms outlined in the IMF's latest programme report released yesterday, the government is required to reduce external payment arrears in the power and fertiliser sectors from $870 million in June 2025 to $562 million by December, and further down to $254 million by June 2026.
At the same time, domestic arrears in these sectors must be cut in half, from Tk 28,000 crore in June to Tk 14,070 crore by December, and fully cleared by June 2026.
'External payment arrears have surfaced, notably within the power sector's state-owned enterprises, driven by limited foreign exchange availability and outstanding domestic subsidy arrears owed by the central government to the SOEs,' the global lender said.
Despite some improvement in the current account during the first half of FY25, the IMF cautioned that the overall external position has deteriorated. The appearance of arrears by state-owned enterprises, a 'substantial decline in FDI inflows', and significant unrecorded capital outflows are now projected to widen the external financing gap to $3.8 billion in FY25, well above previous estimates.
National Board of Revenue targets have also been raised to Tk 443,530 crore by June 2025 and Tk 550,700 crore by June 2026. Net international reserves must climb from $17.4 billion to $22.41 billion by mid-2026.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
28 minutes ago
- First Post
China's mineral curbs a wake-up call for India to cut reliance: GTRI
China's export curbs on critical minerals crucial for India's electronics sectors are no longer mere warnings but a wake-up call for New Delhi, underscoring the need for urgent measures like reverse-engineering of low- to mid-tech imports to cut overreliance on Beijing, think tank GTRI said on Thursday. read more China has come to have a near-monopoly on the supply of critical minerals in the world. (Photo: Reuters) China's export restrictions on key minerals essential to India's electronics sector are no longer just warnings but a wake-up call for New Delhi, highlighting the urgent need to reverse-engineer low- to mid-tech imports and reduce dependency on Beijing, think tank Global Trade Research Initiative (GTRI) said on Thursday. China has been using its economic influence in a calculated manner to hinder India's industrial growth, GTRI noted. Over the past year, Beijing has progressively tightened its control over exports of crucial raw materials and engineering support, sending a clear message to India amid rising geopolitical tensions and shifts in global trade patterns. STORY CONTINUES BELOW THIS AD Since mid-2023, China has imposed curbs on exports of critical minerals such as gallium and germanium — essential for India's electronics, EV, and defence industries. Similarly in late 2024, the restrictions were extended to graphite, dealing a direct blow to India's clean energy and battery manufacturing sectors, it said, adding that citing national security reasons, Beijing has cloaked these actions in strategic ambiguity, while tightening its grip on supply chains that India is still dependent on. 'The pressure mounted further in June 2025, when Chinese battery giant CATL reportedly directed Foxconn to withdraw all Chinese engineers from its manufacturing unit near Chennai. The move disrupted timelines and coordination at a crucial time for India's electronics and EV supply chain buildout,' GTRI Founder Ajay Srivastava said. India's imports from China surged in FY25, while exports declined sharply. It has led to a widening trade deceit of USD 100 billion. Chinese firms now supply over 80 per cent of India's needs in laptops, solar panels, antibiotics, viscose yarn, and lithium-ion batteries, deepening strategic vulnerabilities. 'India must act to slash Chinese import dependence. There is an urgent need to do reverse-engineering of low- to mid-tech imports, domestic production incentives, and long-term investment in deep-tech manufacturing to reduce overreliance on a geopolitical rival and build economic resilience,' Srivastava said. He added that a strategic and phased approach can help reduce this dependence significantly. 'The first step is to launch a nationwide reverse-engineering initiative. Sector-specific industrial labs should be set up to deconstruct commonly imported goods and develop standardised, open-access blueprints,' he said. These designs can then be shared with Indian MSMEs for niche production and with larger firms for mass manufacturing, he suggested. STORY CONTINUES BELOW THIS AD This model, Srivastava said, combining public R&D and private production, would enable rapid substitution of many high-volume imports. 'India should also create a 'Localize-100' tracker to monitor progress on localising the top 100 low- and mid-tech imports from China,' he said. PTI RR TRB
Time of India
an hour ago
- Time of India
Turkey eyes strategic foothold in Bangladesh with defence zones
A top Turkish defence industry executive is expected to visit Bangladesh next week as the two countries seek to expand military-industry partnership. Haluk Gorgun, head of Turkey's Defence Industry Agency (SSB), is due in Dhaka on July 8 for a day-long visit during which he will pay a courtesy call on interim government Chief Adviser Muhammad Yunus, people familiar with the development said. Gorgun will also meet army chief Gen Waqar-uz-Zaman, navy chief Admiral M Nazmul Hasan and air force chief Air Chief Marshal Hassan Mahmud Khan. Turkey, which had limited presence in Bangladesh under the Sheikh Hasina government, is looking to expand its strategic footprint in Dhaka while Bangladesh is planning to set up two defence industry complexes with Turkey's support for domestic issue as well as exports. Bangladesh Investment Development Authority (BIDA), the country's apex investment promotion agency, is planning to establish defence industrial complexes in Chittagong and Narayanganj in partnership with Turkish defence firms. BIDA executive chairman Chowdhury Ashik Mahmud Bin Harun was on a five-day trip to Turkey recently. Bangladesh needs a reliable partner in aerospace technology and it would be a win-win situation for both Bangladesh and Turkey if they cooperate with each other, foreign affairs adviser Md Touhid Hossain had said at a conference while visiting Turkey in April. Hossain had a meeting with Turkish Aerospace president and CEO Mehmet Demirolu on the sidelines of the Antalya Diplomacy Forum 2025, where the two discussed cooperation.
&w=3840&q=100)
Business Standard
2 hours ago
- Business Standard
IMF says US tax, spending bill runs counter to deficit-cutting advice
The massive US tax and spending bill slated for a final vote in Congress runs counter to the International Monetary Fund's recommendations that Washington reduce fiscal deficits over the medium term, IMF spokesperson Julie Kozack said on Thursday. Kozack told a regular news briefing that there was a broad consensus that the Republican bill will add to US fiscal deficits, while the US needs to start a fiscal consolidation. "From the IMF side, we have been consistent in saying that the US will need to reduce its fiscal deficit over time to put public debt-to-GDP on a decisive downward path," Kozack said. "Of course, the sooner that process starts to reduce the deficit, the more gradual the deficit reduction can be over time." Kozack said that there were many policy options for the US to reduce deficits and debt, adding: "It is, of course, important to build consensus within the United States about how it will address its these chronic fiscal deficits." In recent years, the IMF has recommended that the US raise taxes, including on middle income earners, to close fiscal deficits. The Republican tax bill extends 2017 tax cuts and adds new tax breaks for many Americans. The IMF advice is at odds with the views of US Treasury Secretary Scott Bessent, who has consistently said that he disagrees with traditional budget forecasts and believes that the so-called "One Big Beautiful Bill Act" will spur additional US economic growth that will boost revenues. The United States is the biggest shareholder of the IMF. Bessent, who manages the US stake, has criticized the Fund for straying too far from its core economic stability and surveillance missions. Kozack said that the IMF was examining details of the US legislation and the likely impact on the economy, and will incorporate its analysis into the late July update of its World Economic Outlook global growth forecasts. The forecasts also will assess the state of play on US tariffs, after President Donald Trump's July 9 deadline to subject many countries to sharply higher duties unless they agree trade deals.
