Context. Since the last Article IV Consultation in November 2013, macroeconomic stability has been maintained, supported by prudent policies under the recently-concluded Extended Credit Facility arrangement. However, private domestic demand and credit growth have been tepid, and export growth has slowed, as it has in other Asian countries. The real effective exchange rate has appreciated strongly, but the external position is broadly in line with fundamentals and desirable policies. Outlook and risks. Provided that political calm prevails, public investment is ramped up, and constraints on private investment are eased, growth is projected to accelerate gradually to 7 percent over the medium term. Lingering political uncertainty, low fiscal revenues, and weaknesses in state banks' balance sheets are the main challenges to the medium-term outlook.


Context. Since the last Article IV Consultation in November 2013, macroeconomic stability has been maintained, supported by prudent policies under the recently-concluded Extended Credit Facility arrangement. However, private domestic demand and credit growth have been tepid, and export growth has slowed, as it has in other Asian countries. The real effective exchange rate has appreciated strongly, but the external position is broadly in line with fundamentals and desirable policies. Outlook and risks. Provided that political calm prevails, public investment is ramped up, and constraints on private investment are eased, growth is projected to accelerate gradually to 7 percent over the medium term. Lingering political uncertainty, low fiscal revenues, and weaknesses in state banks' balance sheets are the main challenges to the medium-term outlook.

Fund Relations

(As of November 30, 2015)

Membership Status

Joined August 17, 1972; accepted the obligations under Article VIII, Sections 2, 3, and 4 on April 11, 1994.

General Resources Account

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SDR Department

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Outstanding Purchases and Loans

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Latest Financial Arrangements

(In millions of SDRs)

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Projected Payments to the Fund2

(In millions of SDRs (based on existing use of resources and present holdings of SDRs))

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Article IV Consultation

The previous Article IV consultation was concluded on November 27, 2013 (IMF Country Report No. 13/357), jointly with the third review under the Extended Credit Facility arrangement.

Safeguards Assessment

  • A safeguards assessment of Bangladesh Bank (BB) was concluded in July 2011. Since then, BB has implemented a number of recommendations, including approval for incorporation of the Security Printing Corporation (Bangladesh) Limited, a subsidiary of BB, in the audit plan of BB’s internal audit department (IAD); and approval of Reserve Management Guidelines by the BB Board and monitoring of investment of foreign exchange reserves by a committee headed by a Deputy Governor. A certified chartered accountant was appointed in March 2014 as an advisor to the Audit Committee of the BB Board. After engaging a globally-reputed firm for two consecutive years (FY13 and FY14), the authorities appointed local audit firms, affiliated with global firms, to audit BB’s FY15 financial accounts. On all three occasions, BB received unqualified audit reports. The authorities have also implemented most of the recommendations made in the management letters for the FY13 and FY14 audits.

  • Going forward, staff recommended appointing a globally-reputed audit firm to conduct the external audit of BB’s financial statements on an annual basis. To further strengthen BB’s internal audit function, the authorities are working toward improving risk management in key departments; developing risk rating reports; integrating different information technology platforms; and reviewing their operational risks. Staff capacity in the IAD needs attention. The safeguards assessment also recommended that the legal framework of the BB be strengthened.

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

  • Bangladesh has graduated from monitoring by the Financial Action Task Force of compliance with AML/CFT processes and has become a member of the Egmont Group of Financial Intelligence Units. The Asia Pacific Group assessed the country’s AML/CFT framework in October 2015 and will publish a report after its July 2016 plenary. A national strategy for AML/CFT for 2015-17 has been prepared and several MOUs have been signed with financial intelligence units around the world.

Exchange Arrangement

  • Exchange regime. The de jure exchange rate regime is a float. Effective February 7, 2013, the de facto regime was reclassified from other managed to a stabilized arrangement.

  • Exchange restriction. The Executive Board had urged the authorities to adopt a timetable to remove the remaining exchange restriction on the convertibility and transferability of proceeds of current international transactions in nonresident taka accounts. In September 2013, a strategy paper laid out a roadmap toward gradual liberalization of exchange regulations. Since then, BB has eased several foreign exchange regulations and reporting routines. These include easing of restrictions on certain debits for current transactions purposes from the nonresident taka accounts, though a prior approval is required. In September 2015, amendments to the 1947 Foreign Exchange Regulations Act were approved in parliament, also easing existing regulations.

Resident Representative

The resident representative office was established in 1972. Ms. Stella Kaendera is the current Resident Representative since July 2014.

Bangladesh: Technical Assistance, 2014-15

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IMF-World Bank Collaboration

(December 2015)

1. The IMF and World Bank Group (both International Development Association (IDA) and International Finance Corporation (IFC) teams) work together to promote policies and critical reforms that are essential for maintaining macroeconomic and financial stability and for sustained high growth and poverty reduction in Bangladesh.

  • Over the last three years, the IMF’s priorities for macroeconomic policies and structural reforms were anchored by the Extended Credit Facility (ECF) arrangement, approved in April 2012 and completed in October 2015. With support from this arrangement, the authorities restored macroeconomic stability and undertook reforms in the areas of domestic revenue mobilization, notably enacting a new Value Added Tax Act in 2012; tax revenue administration; fiscal expenditure allocation, including the reduction in regressive energy subsidies and strengthening of social safety nets; public financial management, including strengthening the external debt management; banking supervision and regulation, including amending the Banking Companies Act in 2013; addressing weaknesses in the state-owned commercial banks; improving central bank operations; and liberalizing foreign exchange regulations. The priorities for macroeconomic policies and reforms going forward are identified in the main text of this report.

  • The Bank’s strategy is reflected in the forthcoming Country Partnership Framework (CPF) for FY16-20, to be delivered in 2016. The CPF, which is aligned with the Government’s Seventh Five Year Plan, is anchored in the Bangladesh Systematic Country Diagnostic (SCD), which was completed in 2015. The SCD identifies five transformational investments needed for Bangladesh to create more and better jobs and to accelerate poverty reduction. These are in the areas of energy; inland connectivity and logistics; regional and global integration; urbanization; and adaptive delta management. In addition, the SCD identifies three foundational priorities which represent important prerequisites for growth and where policy attention must be sustained: macroeconomic stability; human development; and institutions and business environment.

2. The teams note that collaboration between the IMF and the World Bank Group is strong, both at headquarters and in the field (through the IMF Resident Representative’s Office and the World Bank’s Country Office). For instance:

  • There are frequent formal and informal exchanges of information on each other’s activities and on assessments of developments, the outlook, and key policy issues.

  • The teams invite each other to participate in critical internal discussions, share key documents, and seek comments on them.

  • Staffs are also invited to relevant Board meetings.

  • The teams regularly discuss the division of labor between the two institutions, and collaborate on the Debt Sustainability Analysis (DSA).

3. The teams agree that the two institutions should remain focused on the following reform areas, and based on the following division of labor:

  • Tax policy and administration. Bangladesh has one of the lowest tax-to-GDP ratios in the world. To boost growth, higher public investment in critical infrastructure is needed and for that purpose it is necessary to improve revenue generation. Under the ECF arrangement, the authorities enacted a new Value Added Tax (VAT) Act, 2012, which is now being implemented for a launch in July 2016. The new VAT is currently the authorities’ main tool to boost tax collections over the medium term. Efforts to boost the capacity of the National Board of Revenue and modernize the Direct Tax Code are ongoing. Division of labor: The new VAT law and the VAT implementation plan continue to receive technical assistance (TA) from the IMF. A resident advisor was in place until late 2014 to help with VAT implementation. IDA will provide financial support for several aspects of implementation, including designing organizational reforms and new administrative processes, which are urgent priorities. Both institutions are currently providing TA to the implementation process.

  • Public financial management (PFM). Sound PFM is important for maintaining fiscal discipline and improving the quality of public expenditure. Division of labor: IDA has provided assistance through its administration of the Strengthening Public Expenditure Management Program (SPEMP), supported by a multi-donor trust fund. SPEMP focused on core PFM issues in the executive branch of government, as well as strengthening public expenditure oversight functions in parliament and audit institutions. IDA is also taking the lead on public procurement reform and capacity building. The IMF is providing support through several TA missions on cash flow forecasting and management, on budget and accounting classification, and on the budget formulation process.

  • Debt management. There has been significant progress on strengthening debt management practices under the ECF, but more needs to be done. Division of labor: The IMF and IDA will continue working jointly in this area, including on the DSA, with the IMF coordinating views on main macroeconomic assumptions and outlook and supporting structural reforms on debt management through Article-IV consultations, and IDA providing technical support on debt management capacity through the Public Expenditure and Revenue Analysis (PERA) work, Analytical Support Activity on Public Financial Management (PFM) reforms as well as a Debt Management Performance Assessment (DeMPA).

  • Monetary and exchange rate policies. The IMF takes the lead in this area. IDA will play a complementary role through operations to strengthen payments systems at Bangladesh Bank (BB).

  • Financial sector reforms. A sound and viable financial sector will remain critical for creating an improved environment for private sector investment. The IMF has provided TA on banking supervision, including through a resident advisor until late 2014, and on strengthening the state-owned commercial banks (SOCBs). The IMF will continue to support banking sector reforms through the Article-IV consultations. IDA will provide support to improve the regulatory and oversight capacity of BB and help strengthen the SOCBs through automation/improved management systems and business process reengineering, including potential governance reforms, and laying the foundation for a well-functioning insurance and pension sector.

  • Energy sector reform. Over the last three years, spending on subsidies, particularly on energy, has come down as a share of GDP, initially through domestic price adjustments and more recently with help from a decline in the international oil prices. Further price adjustments are needed, including through adoption of systematic adjustments to domestic fuel prices in line with international price movements. Reducing financial and operational inefficiencies in state-owned enterprises in the energy sector is also critical. Bangladesh ranks poorly among the low-income countries in terms of availability of electricity. Finally, going forward, power generation should rely less on expensive liquid fuel. Proper incentives are needed for stepped-up private investment in the energy sector. Institutionalization of transparent and competitive procurement processes will send the right signal to the market and help attract qualified sponsors. Division of labor: IDA will lead on policy dialogue and investment in this area, with the IMF focused on policies to address fiscal implications.

  • Social protection. Under the ECF arrangement social spending as a share of GDP was protected. However, further improvement is needed, particularly through improved targeting, and consolidation of a large number of programs. Rationalization of regressive fuel subsidies will also help provide additional room for enhanced spending on social safety programs. Division of labor: IDA is taking the lead in this area through support to the development of the National Household Database to be used for objective beneficiary selection and for improved management and administration of SSNs.

  • Trade and investment climate reform. To boost productivity and investment, it is vital to create a level playing field for all sectors and reduce the cost of doing business. Division of labor: IDA has the leadership of a Diagnostic Trade Integration Study that has been completed, and IFC is targeting incremental reforms with the aim of improving legal and administrative procedures. Trade & Competitiveness global practice, a joint IDA-IFC unit, will address institutional and policy reforms (including those addressed in the Diagnostic Trade Integration Study) to boost trade and sectoral competitiveness and will provide IDA financing for development of special economic zones. The IMF provided support in reviewing the foreign exchange regulations.

  • Statistical policy. Improvements in statistics are critical to formulating sound policies and monitoring their outcomes. Both IDA and the IMF have sustained engagement in this area and will ramp it up further in the future as needed. Division of labor: IDA on poverty, social, development statistics, and statistical infrastructure including IT needs and the IMF on macroeconomic and financial statistics.

  • Other structural policies. The World Bank keeps the IMF informed about its work on governance and anti-corruption, local government and decentralization, and private sector development. Upstream sharing allows the IMF to comment on such work before it is finalized.

4. The teams agree to continue to keep each other informed of their respective activities, coordinate financial and technical support, and share key documents.

Relations with the Asian Development Bank1

(December 2015)

Lending and Technical Assistance Operations

5. Bangladesh had cumulative public sector borrowing from the Asian Development Bank (AsDB) of US$16.1 billion (248 loans) as of December 31, 2014, and technical assistance (TA) grants of US$240.6 million (409 projects). The country is one of the largest borrowers of concessional Asian Development Fund (ADF) resources. The loans and TA have supported all key sectors, including energy and transport, social infrastructure, and agriculture and natural resources. The AsDB has also supported eleven private sector projects worth US$372.3 million, including the Bibiyana II Gas Power Project which involves design, engineering, construction, and operation of a 341 megawatt (MW) combined-cycle, gas-fired power plant—and PRAN Agribusiness Project which supports development of new agribusiness production facilities by PRAN, the largest food and agribusiness group in Bangladesh.

6. In 2014, the AsDB approved a total amount of US$1.09 billion in loans. This included loans for (i) Skills for Employment Investment Program (Tranche 1) (US$100 million ADF); (ii) Coastal Towns Environmental Infrastructure Project (US$52 million ADF); (iii) Irrigation Management Improvement Project (US$46 million ADF); (iv) Flood and Riverbank Erosion Risk Management Investment Program- Project 1 (US$65 million ADF); (v) South Asia Subregional Economic Cooperation Railway Connectivity: Akhaura-Laksam Double Track (US$505 million, of which US$105 million is from ADF); and (vi) Third Urban Governance and Infrastructure Improvement Project (Sector) (US$125 million ADF).

Country Partnership Strategy

7. The Country Partnership Strategy (CPS) 2011–15, approved on October 27, 2011, focuses on six sectors: energy, transport, urban development, education, agriculture and natural resources, and finance. The CPS is closely aligned with the government’s Sixth Five-Year Plan priorities and aims to contribute to more inclusive and greener growth. Under the CPS, the total indicative resources for public sector lending during 2011–15 included US$2.4 billion in ADF and US$2.1 billion in Ordinary Capital Resources (OCR). AsDB’s OCR financing would be used for major revenue-generating infrastructure projects. An average of US$9.6 million per annum in TA resources was included, of which 35 percent would be allocated for project design.

8. The CPS prioritizes the thematic drivers of environmental sustainability and climate resilience, regional cooperation, knowledge solutions, partnerships, good governance and capacity development, gender equity, and private sector development. Country Operations Business Plan (2016–18), under the current CPS, was approved in October 2015.

9. Over a five-year cumulative period from 2010–14, Bangladesh leveraged US$4.4 billion of co-financing. By the end of 2014, cumulative direct value-added official cofinancing for Bangladesh amounted to US$5.54 billion for 52 investment projects and US$79.0 million for 94 technical assistance projects. In 2014, five projects received cofinancing: (i) from European Investment Bank for South Asia Subregional Economic Cooperation Railway Connectivity: Akhaura-Laksam Double Track (US$175 million); (ii) from the OPEC Fund for Third Urban Governance and Infrastructure Improvement Project (Sector) (US$40 million); (iii) from Swiss Development Cooperation for Skills for Employment Investment Program (Tranche 1) (US$10 million); (iv) from the Government of Netherlands for Flood and Riverbank Erosion Risk Management Investment Program- Project 1 (US$15.3 million); and (v) from the Sanitation Financing Partnership Trust Fund under the Water Financing Partnership Facility, and the Strategic Climate Fund for Coastal Towns Environmental Infrastructure (US$42 million).

Economic and Sector Work Program

10. Each year, the AsDB publishes its Asian Development Outlook and Asian Development Outlook Update, in which it assesses macroeconomic performance. The AsDB’s Bangladesh resident mission also publishes the Bangladesh Quarterly Economic Update. A bimonthly Economic Indicators Update is also prepared. BRM also commissions studies on economic and thematic areas, relevant to the country’s development issues.

Statistical Issues

(December 2015)

Assessment of Data Adequacy for Surveillance

General. Data provision has some shortcomings, but is broadly adequate for surveillance. The most affected areas are national accounts, fiscal, and external sector statistics.

National Accounts. Bangladesh’s annual GDP time series has a base year of 2005/06 based on a comprehensive benchmark compiled and published by the Bangladesh Bureau of Statistics (BBS) in 2013. There is a material statistical discrepancy in subsequent time periods as minimal source data is available – estimates are predominately derived from a biennial census of manufacturing establishments or extrapolations from the 2005/06 benchmark. The BBS has been provided with technical assistance to use value-added tax (VAT) data from the National Board of Revenue (NBR) to compile contemporary estimates and construct a contemporary statistical business register to increase the scope and coverage of economic statistics. The BBS is also implementing recommendations provided by the resident advisor to: (a) improve compilation procedures used to construct GDP; and (b) enhance institutional arrangements and address concerns raised by users. Quarterly GDP is currently not compiled.

Price Statistics. A new CPI series with base year 2005/06 was introduced in July 2012 and improved coverage. The CPI series is currently undergoing further improvements, including incorporating the recent household survey and Classification of Individual Consumption According to Purpose (COICOP). The IMF provided technical assistance (TA) in these areas. The producer price index has an outdated base year (1988/89) and requires urgent attention.

Government Finance Statistics. The Ministry of Finance (MoF) is currently revising the Budget and Accounting Classification System (BACS) to follow the latest international standard (GFSM 2014) and integrate the accounting and reporting systems for the budgetary central government. The new BACS is expected to be incorporated into the FY18 Budget. The coverage of units outside central government is inadequate and is an area for future attention. No data are published on the assets and liabilities of the general government.

Monetary and Financial Statistics. Bangladesh Bank (BB) compiles monetary data using the standardized report forms (SRFs) framework. The SRFs are reported electronically to the IMF on a regular basis. As a result, a consistent time series based on SRF data is available from December 2001. A survey of Other Financial Corporations (OFCs) is not yet available.

Financial Soundness Indicators. Bangladesh has started reporting 10 core and 9 encouraged Financial Soundness Indicators (FSIs) since August 2014.

External Sector Statistics. A quarterly BPM6 compliant time series covering the period 2005 to 2014 inclusive has been published by BB and reflects improved coverage of goods and trade credits made during recent years. Nonetheless, inconsistencies between the Balance of Payments (BOP), International Investment Position (IIP), and other macroeconomic statistics remain and should be continuously addressed. Published IIP estimates remain weak.

Data Standards and Quality

Bangladesh has participated in the General Data Dissemination System (GDDS) since March 2001. The Data Module of the ROSC was published in December 2005.

Bangladesh: Table of Common Indicators Required for Surveillance

(As of December 1, 2015)

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Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); not available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments. Data for the general government are currently not being compiled due to capacity limitations.

Currency and/or maturity composition may not be available for the most recent data.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.


Extended Credit Facility (ECF), formerly PRGF.


When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.


Bangladesh joined the Asian Development Bank in 1973.