Bangladesh Scraps Its IMF Loan Programme Again, Betting on Bonds to Raise $50 Billion a Year

Finance Minister Amir Khosru Mahmud Chowdhury told the inauguration of World Investor Week 2026 in Dhaka on Sunday that Bangladesh has cancelled its International Monetary Fund loan programme, the second time in under six months that the government has walked away from an IMF arrangement. "I have cancelled the IMF programme, as you have seen. Their conditions are not acceptable to us," he said, adding that Bangladesh's economy would reach $1 trillion by 2034 "without assistance from donor agencies."

The declaration lands just two days after BD Financial Review reported the government would borrow Tk30,107 crore from domestic banks this quarter alone to plug a widening revenue shortfall, a reminder of how closely the country's external financing choices and its domestic cash crunch are now tied together. If Dhaka is serious about walking away from the Fund a second time, the money to run the state and finish its biggest infrastructure projects has to come from somewhere else, and the minister was explicit about where he thinks that somewhere is.

A programme that was cancelled once already

This is not the first time this exact relationship has ended. Bangladesh originally secured a $4.7 billion loan from the IMF in January 2023, spread across three facilities, the Extended Credit Facility, the Extended Fund Facility and the Resilience and Sustainability Facility. The programme was expanded by $800 million to $5.5 billion in May 2024. The first instalment of $476.3 million arrived in February 2023, and by the time talks over a sixth tranche stalled, Bangladesh had received five instalments totalling around $3.64 billion.

Those talks did not simply stall quietly. Back in May this year, the finance ministry held a virtual meeting with IMF Deputy Managing Director Nigel Clarke and agreed to exit that original $5.5 billion programme altogether, choosing instead to negotiate a fresh three to four year arrangement worth an estimated $5 billion to $6 billion. At the time, Khosru framed the move in almost identical language to what he used this week: "We are an elected government. We will not accept any condition that goes against public interest." Officials pointed to disagreements over a single VAT rate, reduced tax exemptions, a fully market based exchange rate, and cuts to power and fertiliser subsidies as the sticking points.

Five months on, it appears that replacement negotiation has also collapsed, or at least been set aside. The minister's language this week, cancelling rather than renegotiating, suggests Dhaka is no longer treating an active IMF seal of approval as something it needs, a notable shift from May, when officials were still describing that seal of approval as important for unlocking financing from the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank and Japan's development agency.

The pivot to bonds and capital markets

In place of concessional lending, Khosru laid out an ambition to raise roughly $50 billion a year through a mix of instruments: domestic bonds and securitisation, international dollar bonds, panda bonds issued in the Chinese market, samurai bonds in Japan, and local currency bonds sold to foreign investors. He also spoke of building direct links with financial centres in New York and Hong Kong and encouraging the creation of Bangladesh focused international equity funds. "Capital market is the answer, bond market is the answer," he told the investor week audience, citing major infrastructure like the Padma and Jamuna bridges as the kind of project he wants funded this way rather than through bank borrowing or loans from multilateral lenders.

It is a strikingly different tone from the one Dhaka struck as recently as this spring, when officials said the government still needed $3 billion to $4 billion a year in budget support and hoped to keep drawing at least $1 billion annually from the IMF specifically because that relationship made other lenders more comfortable extending credit. Economist Zahid Hussain had put the logic plainly around that time: multilateral and bilateral partners "do not conduct this assessment independently, they rely on the IMF. If the IMF says the programme is on track, they proceed." Walking away from that assessment entirely means Bangladesh is betting it can convince bond investors and equity funds to make their own independent judgment instead.

What was actually in dispute

The IMF's disputed conditions were never a secret, even if Khosru declined to list them all again this week. Across both this year's negotiations and the original 2023 programme, the recurring friction points have been a unified VAT rate instead of Bangladesh's patchwork of exemptions, a push to collect more through turnover tax, a fully market determined exchange rate rather than managed interventions by Bangladesh Bank, deeper cuts to energy and fertiliser subsidies, and governance reforms at the National Board of Revenue and in the banking sector. Those are largely the same themes BD Financial Review has tracked through NBR's own VAT collection shortfall this fiscal year, in which 29 of 34 large taxpayer units missed their targets, and through the central bank's slower moving effort to overhaul family control rules at private banks.

Why the timing is awkward

The declaration arrives in the same week the government confirmed it will lean more heavily on domestic bank borrowing, a method the Centre for Policy Dialogue's Fahmida Khatun has already warned signals a liquidity shortage in government coffers rather than a sustainable financing strategy. A new government pay structure is also due to add Tk37,372 crore in costs this December. None of that spending pressure disappears simply because the IMF relationship has ended. If the bond and capital market plan takes years to mature into the kind of deep, liquid market that can absorb tens of billions of dollars in annual issuance, as most comparable markets have taken years to build, the gap in between will likely still be filled the way it has been filled this quarter: by borrowing from the country's own banks.

Date	Event	Amount
January 2023	Original IMF programme approved (ECF, EFF, RSF)	$4.70 billion
February 2023	First tranche disbursed	$476.3 million
May 2024	Programme expanded	+$800 million (total $5.5 billion)
2023 to 2025	Five tranches disbursed in total	Approximately $3.64 billion
May 2026	Government exits original deal, begins talks on a new one	New programme proposed at $5 to $6 billion
October 2026	Finance minister declares the programme cancelled	Replacement financing target: about $50 billion a year via bonds and capital markets

What comes next

Khosru's comments did not include a timetable for the bond and equity fund plan, nor details on how quickly Bangladesh could realistically tap dollar, panda or samurai bond markets given its sub investment grade credit standing. Investors in those markets will be watching for concrete steps, a sovereign bond issuance, a securitisation framework, or formal talks with Hong Kong or New York exchanges, rather than speeches, before treating this as more than rhetoric. For now, the practical financing of the state continues through the channel BD Financial Review already reported this week: domestic bank borrowing, with the capital markets pivot presented as the destination rather than the current reality.