IMF cuts growth outlook amid tighter policies, election uncertainty

The International Monetary Fund (IMF) has cut Bangladesh's growth projection, citing three key factors — a tighter monetary and fiscal policy mix, uncertainty stemming from US tariffs, and the upcoming national election.

Krishna Srinivasan, director of the IMF's Asia and Pacific Department, made the remarks yesterday at a press briefing held at the IMF headquarters in Washington, DC.

"I think there are three reasons. One, of course, is that the policy mix has been tighter," said Srinivasan.

"Second, tariffs and uncertainty have played a big role. And third, two additional uncertainties are weighing on Bangladesh's economic prospects: the upcoming elections and significant weakness in the financial sector, which affects credit availability."

On Tuesday, the multilateral lender released its World Economic Outlook, projecting Bangladesh's GDP growth to reach 4.9 percent in FY26, down from the 5.4 percent forecast in June.

The IMF expects inflation to remain elevated at around 8.5 percent by the end of FY26, mainly due to previous supply-side shocks, Srinivasan said.

An IMF mission is expected to visit Dhaka soon to conduct the next review of Bangladesh's ongoing loan programme.

The review will focus on two priority areas -- fiscal reforms, particularly revenue mobilisation, and financial sector stability, he added.