Bangladesh has secured assurances of substantial financial support from the International Monetary Fund (IMF), World Bank, and other multilateral lenders to tackle the energy crisis triggered by the US-Israel war on Iran.
“I believe we will get the package [to recover from the energy shock], and things are moving positively. I expect Bangladesh will receive an improved package,” Finance Minister Amir Khosru Mahmud Chowdhury told reporters on the sidelines of the IMF-World Bank Spring Meetings in Washington on Thursday night (Bangladesh time). He did not say how much Bangladesh may receive.
Leading an 11-member delegation, the minister has held a series of meetings with the IMF, World Bank, Japan International Cooperation Agency (JICA), and other donor agencies over the past four days.
Officials in the delegation said Bangladesh pressed for additional funds to cover the shortfall caused by the energy crisis, beyond regular budget support.
Speaking to journalists, Amir Khosru said that the energy crisis was a common topic in all meetings. “We need support here. This concern has been raised in meetings with the IMF, World Bank, and other multilateral bodies. The discussions have been very positive, but we must wait to see what the package will be.”
He added that talks with development partners will continue, with their teams expected to visit Bangladesh. “My impression is that we will get the package,” he said.
Meanwhile, Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, said discussions on additional financial support for Bangladesh are ongoing.
Responding to a question on the additional package at a press conference at the IMF headquarters in Washington on Thursday night, he said Bangladesh, like many other Asian countries, has been affected by the energy shock due to its heavy reliance on imports.
“We are working with the authorities in terms of policy support and on the programmes, and negotiations are ongoing,” he said. “We’ll have to just wait and see how those things pan out.”
$3 BILLION EMERGENCY FUND
The government is aiming to secure around $3 billion in emergency assistance from development partners including the IMF and World Bank to cover surging energy and fertiliser import bills for the March–June period triggered by the war.
A Finance Ministry impact analysis estimates Bangladesh will need an additional $2.61 billion in foreign exchange to meet these costs. Total import expenditure on oil, liquefied natural gas (LNG), and fertiliser over the four-month period is projected at approximately $5.62 billion, an 86.7 percent jump from a year earlier, it added.
Bangladesh is trying to secure funds from the multilateral lenders, as they have launched special programmes for war-affected countries.
The World Bank announced it could mobilise up to $100 billion over the next 15 months, surpassing the $70 billion provided during the Covid-19 pandemic. The IMF has separately declared up to $50 billion in emergency support for developing and low-income countries, while the Asian Development Bank has unveiled a dedicated package for its Asia-Pacific members.
REGULAR BUDGET SUPPORT
Beyond the emergency assistance, Bangladesh is set to receive more than $2 billion in budget support from three development partners in the current fiscal year.
Beyond emergency assistance, Bangladesh is on track to receive more than $2 billion in regular budget support this fiscal year: $1.3 billion from the IMF’s $5.5 billion loan programme (in two instalments) by June, $400 million from the World Bank, and $750 million from the ADB.
However, progress hinges on meeting IMF reform conditions -- many of which remain unfulfilled, particularly around exchange rates and revenue. Failure to satisfy these benchmarks could jeopardise financing from other institutions as well.
Krishna Srinivasan was candid about Bangladesh’s fiscal performance, saying the country has not done well in terms of revenue intake.
“Revenue intake has slipped over the last three years. A lot of reforms are needed -- both on the fiscal side and on the revenue side,” he said, adding that there is work to be done across all three programme pillars: revenue reform, financial sector rehabilitation, and exchange rate adjustment.
Officials said Bangladesh is also pushing for additional budget support from the development partners under relaxed conditionality, similar to arrangements made during the pandemic. Discussions are underway with the World Bank to repurpose up to $1.5 billion in undisbursed funds from existing projects toward new initiatives or policy support.
