IMF concerned over high inflation in Bangladesh

The International Monetary Fund on Tuesday expressed deep concerns to the Bangladesh Bank over the persistently high inflation in the country.

An IMF delegation met with Bangladesh Bank governor Ahsan H Mansur and other senior officials, where they highlighted the central bank’s struggle to rein in inflation, according to BB spokesperson and executive director Husne Ara Shikha.

According to the IMF, average inflation surged to 11.6 per cent, far exceeding the target of 7.2 per cent.

The IMF stressed the importance of maintaining a high policy interest rate for an extended period until inflation is brought under control.

It also recommended increasing the already elevated policy rate further if necessary to curb inflation effectively.

If the Bangladesh Bank adheres to such approach, inflation is projected to stabilise at 10 per cent by the end of 2025 and potentially decrease to the target level of 7 per cent by late 2026.

Shikha claimed that the Bangladesh Bank had successfully met all the conditions and targets set by the IMF.

However, the IMF recommended modernising the monetary policy framework to address systemic inefficiencies and ensure more effective inflation management.

The disbursement of the next tranche under the ongoing $4.7 billion loan package is expected by December.

So far, the IMF has disbursed $2.3 billion of the loan since 2023.

Additionally, the Bangladesh government has sought an additional $3 billion in funding from the lender.

On August 7, the IMF said that it would continue its ongoing $4.7 billion loan programme in Bangladesh despite the government change.