The International Monetary Fund (IMF) has cautioned Bangladesh against providing unsecured liquidity injections to weak banks, warning that such measures could undermine financial stability without credible reforms.
According to a statement released on Friday, the IMF said Bangladesh’s economy has slowed while inflation remains elevated, highlighting growing macroeconomic and financial risks.
GDP growth fell to 3.7% in FY25 from 4.2% in FY24, reflecting disruptions from the 2024 uprising, tighter policies and weak investment. Inflation eased from earlier double-digit levels but remained high at 8.2% year-on-year in October. Although foreign exchange reserves have begun to recover, tax revenue collection weakened sharply in FY25.
The IMF stressed the urgent need for comprehensive banking sector reforms aligned with international standards, including asset quality reviews, clear estimates of undercapitalisation, stronger supervision and improved governance. It warned that unsecured liquidity support to weak banks could worsen vulnerabilities.
The Fund also called for a tight monetary policy to curb inflation, full implementation of exchange rate reforms, stronger revenue mobilisation, subsidy rationalisation and governance reforms, stressing that sustained policy action by the next administration will be critical to restoring economic stability.
