Finance Minister Amir Khasru Mahmud Chowdhury on Sunday said the government cancelled the IMF loan program, saying their condition is not acceptable.
“We are going to be a trillion dollar economy by 2034…...I am going to the market, I am going to raise my money (from there)”, he said while speaking at the opening of World Investor Week 2026 in Dhaka.
To BNP and left-leaning supporters, it means refusing to bow to donors’ conditions, standing on our own feet, and dreaming of a trillion-dollar economy.
But if we set aside the emotion surrounding the announcement and look back a little, another story emerges. It is more about three successive governments repeatedly avoiding the same tasks, rather than about the IMF’s ‘unfair’ conditions.
After more than $230 billion was siphoned out of the country, the banking sector was crippled, a peon amassed Tk 400 crore, ruling-party figures accumulated more than a hundred houses abroad, businessmen took loans and disappeared, and the market went into total collapse, the cost of imports rose sharply after the Russia-Ukraine war in 2022 and foreign exchange reserves began to fall rapidly.
The Awami League government then went to the IMF and secured approval in January 2023 for a $4.7 billion loan. Rather than calling it a loan, we called it a bailout package. You cannot keep an economy going for more than a decade by simply looting it without increasing domestic production. That is what happened.
The IMF’s conditions at the time were no secret.
The value of Bangladeshi taka had to be left to the market, tax collection had to increase, particularly by reducing the tax exemptions that had continued for years. Fuel and power subsidies also had to be reduced. In addition, discipline had to be restored to a banking sector drowning in non-performing loans.
That government did take some steps. In March 2024, an automatic fuel-price adjustment mechanism was introduced. In May, the taka was sharply devalued, with the dollar rising from Tk 110 to Tk 117. But the reserve target was not met. At the government’s request, the IMF lowered the target itself.
The government made little progress in reducing tax exemptions because the beneficiaries of those exemptions were people very close to the centres of power. Many of those who had taken bank loans and failed to repay them were also close to the government. So the failure to meet the conditions was not due to a lack of capacity, but a lack of political will. Tensions with the IMF consequently began to grow.
Meanwhile, the government fell in the July Uprising, and an interim government came to power.
The interim government that took office in August 2024 was identified as a “government of reforms.” People expected that since it did not face the pressure of an electoral mandate, it would at least take the difficult decisions.
In reality, the opposite happened. Amid what was described as bureaucratic obstruction and political manoeuvring by the BNP, the fourth instalment from IMF was delayed because conditions relating to Bangladesh Bank and the NBR were not fulfilled. In April 2025, the IMF mission left without reaching an agreement.
There were also disagreements on at least two issues: how much the taka should be allowed to depreciate and how revenue should be increased.
The government argued that with inflation already so high, allowing the taka to float further would push up prices even more. That argument was not entirely without merit. But at the same time, the then chief adviser Professor Muhammad Yunus’ special assistant publicly warned that Bangladesh would walk away if more conditions were imposed.
Eventually, a middle-ground system known as a “crawling peg” was introduced in May 2025, and two instalments arrived together in June. But the IMF later said in writing that from July to November, Bangladesh Bank had not followed even its own announced rules. Instead of allowing the market to operate, it kept the dollar rate at a level of its own choosing.
On the revenue side, an initiative to split the NBR’s policy and administrative functions into two entities stumbled in the face of protests by officials. Meanwhile, the tax-to-GDP ratio fell further, even though it was already among the lowest in the world.
The deficit remained under control, but not by increasing tax revenue. Rather, spending on development and social sectors was restrained. Money was printed to support weak banks, something the IMF directly warned against.
No further instalment arrived after November 2025. The IMF announced that it would hold discussions with an elected government. For the time being, the instalments were suspended.
When the BNP led elected government came to power in February this year, it found itself caught between two pressures. The consequences of preventing reforms during the interim government’s tenure, including attempts to stop reforms by encouraging bureaucratic resistance, came back to haunt the new government. In fact, the situation became even more difficult.
On one side, fuel prices were soaring because of the Iran war. On the other, there was pressure to fulfil electoral promises, including major social programmes such as the Family Card.
In Washington in April, the IMF made it clear that the $1.3 billion scheduled for June would not be released because the earlier reforms had not been implemented. If Bangladesh wanted a new programme, the conditions would be even tougher.
In May, the government walked away from the old agreement. With about $1.86 billion from the previous programme left on the table, it began discussions for a new three-year programme.
An IMF mission came to Dhaka in July. This time, the questions were where the money for the government’s promises would come from, how the new programme would fit with existing social-security programmes, whether power subsidies would be reduced, and what the pace of exchange-rate and banking-sector reforms would be.
In other words, the same three old questions returned in a new form. Alongside them came a new commitment — the Family Card.
The failure to resolve those differences led to Sunday's announcement of the Finance Minister.
The government was hit hardest by the IMF’s firm position on the Family Card. This also suggests that there was no fully developed economic roadmap for the Family Card project, or that the government was unable to convince the IMF of one. It had already become clear that the government was not going to pursue institutional reforms.
The finance minister’s anger is therefore understandable. In the meantime, oil and gas prices rose, taxes went up and the cost of living increased. In other words, the government became unpopular but did not get the money. It is difficult to call that anything other than inefficiency.
When the stories of the three governments are placed side by side, one thing becomes apparent. The conditions did not change; only the excuses for avoiding them changed.
Under the Awami League, the excuse was pressure from vested interests. Under the interim government, it was fears of inflation and resistance from the bureaucracy. Now, it is electoral commitments.
It is true that every IMF condition was not perfect. When growth is below 4 percent, questions can certainly be raised about the pressure for tight monetary policy and spending cuts.
But increasing tax collection, reforming the NBR and restoring discipline to the banking sector are not the whims of the IMF. They are things Bangladesh needs for itself.
Even if we say goodbye to the IMF, these two tasks will still be waiting for us.
The government is now saying that it will raise money through dollar bonds in New York, panda bonds in China, samurai bonds in Japan, and local-currency bonds at home.
The idea is not new. Many countries raise money this way. But without answering some difficult questions, it is hard to call this an alternative to the IMF.
The first question is cost.
Loans from the IMF and World Bank are cheap; some carry interest rates close to zero. All three major rating agencies have kept Bangladesh below investment grade. Countries with this kind of rating generally have to pay 8–10 percent or more when issuing dollar bonds in international markets.
Investors may demand even higher yields from a country that has just walked away from an IMF programme, because the IMF’s presence itself provides them with a degree of assurance.
In other words, we are giving up cheap financing and moving towards expensive borrowing — at a time when our bargaining position is at its weakest.
The second question is currency risk.
Loans taken in dollars, yuan or yen have to be repaid in those currencies. The weaker the taka becomes, the heavier the debt burden becomes. Even if the interest rates on panda or samurai bonds appear low, this risk can wipe out that advantage.
The third question is scale.
The minister says the country needs $50 billion a year. A country with a rating like ours generally cannot raise more than $1–3 billion at a time in the international market. Bangladesh has also never issued a sovereign dollar bond in the international market.
The first bond will effectively be a test. How much interest will the market demand? How much investor appetite will there be? Without seeing that, shutting the IMF door is like abandoning the boat before learning how to swim.
And we need money immediately.
The fourth question is history.
Sri Lanka followed this path over the past decade. Instead of relying on cheaper development financing, it repeatedly raised sovereign bonds from the market. That model of increasing debt without increasing revenue ended in default in 2022. Eventually, Sri Lanka had to return to the IMF — under even tougher conditions.
The stories of Ghana and Zambia are broadly similar.
This does not mean bonds are bad. We need local-currency bonds and a stronger capital market. That would reduce dependence on bank borrowing and eliminate currency risk.
Foreign-currency bonds can also be useful if issued at the right time, in limited amounts, and alongside a policy framework comparable to what an IMF programme provides.
The problem is that we are doing things in the wrong order.
Credibility has to be established first; then you go to the market.
We are going to the market after throwing away one of the biggest proofs of credibility.
No IMF means no reliability. That is how the market sees it.
The final point is that neither the IMF nor bonds are the real solution. The real solution is to increase tax collection through institutional reform, eliminate corruption and restore discipline.
The government’s reluctance to pursue institutional reform is striking. They may accept failure, but they seem unwilling to move beyond their ego.
It is worth remembering that, for whatever reason, this elected government is in the unusual position of having walked away from the IMF negotiating table.
This has never happened before.
And walking away from the IMF does not make the underlying problems walk away with it.
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Murad Kibria is a writer and chartered accountant.