What happened: Speaking in Bangkok on October 15 on the sidelines of the IMF-World Bank Annual Meetings, IMF Deputy Director for Asia and the Pacific Sonali Jain Chandra said Bangladesh should keep monetary conditions tight while pursuing broader fiscal and financial-sector reform.
The numbers behind the warning: Annual average inflation was 8.7% in June, down from above 10% a year earlier, but the IMF now forecasts inflation of 10.9% for FY2026-27 — the highest in nearly two decades. Revenue has fallen to roughly 7% of GDP, among the lowest ratios in the world. Bangladesh Bank held its policy rate at 9.5% on September 30 after a half-point cut in August.
Why the two goals pull against each other: Tight money restrains inflation but also squeezes credit to a private sector that is already borrowing little. Broader reform — cleaning up a financial sector the IMF called “very weak” and raising revenue — takes years to pay off. In the short run, the government is being asked to accept slower growth while it builds the institutions that would let it grow faster later.
The programme question: Bangladesh left its previous IMF programme in May, eight months early, and has asked for a fresh package. Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the government agrees with most of the IMF’s observations and that talks on new lending will continue in the coming months; he did not disclose a size or terms.
Counterargument: Some economists argue that with growth already weak, an inflation spike driven largely by fuel and imported energy prices is less responsive to interest rates, and that keeping policy too tight risks deepening the slowdown without much effect on prices.
What to watch: Whether the next quarterly monetary policy statement holds the line at 9.5%, and whether a new IMF programme comes with a credible bank-resolution plan rather than only fiscal targets.
Confidence level: Moderate. The forecasts are the IMF’s own; how inflation behaves will depend heavily on global energy prices.
Related reading: IMF calls for tight monetary policy, broader reforms — The Daily Star
