Borrowing by state-owned enterprises will also face tighter scrutiny, as public guarantees can no longer be assumed as automatic
TBS Report
30 September, 2025, 02:15 pm
Last modified: 30 September, 2025, 02:28 pm
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas/File Photo
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The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas/File Photo
The International Monetary Fund (IMF) has imposed a quantitative ceiling on Bangladesh’s foreign loan intake at $8.44 billion for FY26, but what does this mean for the country?
According to economist Zahid Hussain, the restriction signals a turning point that forces Bangladesh to rethink its approach to foreign loans.
The economist believes the ceiling compels the government to systematically evaluate and prioritise its loan pipeline, which exceeds $42 billion.
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Ministries, he said, will now need to focus on projects that either generate foreign exchange or hold strategic value.
Borrowing by state-owned enterprises will also face tighter scrutiny, as public guarantees can no longer be assumed as automatic.
According to Zahid, this new reality demands more careful assessments of repayment capacity and foreign exchange risks before seeking or approving loans.
Without such discipline, he warned, Bangladesh risks undermining its long-term financial stability.
The economist further noted that the ceiling may encourage a shift towards domestic borrowing tools such as treasury bills, Sukuk, and local bonds.
However, these options are not without drawbacks. Increased reliance on domestic financing, he said, could raise inflationary pressures and crowd out private investment if not managed properly.
Zahid suggested that rather than treating the IMF ceiling as a bureaucratic barrier, Bangladesh should approach it as a strategic safeguard.
In his view, the restriction could serve as a catalyst for stronger fiscal and institutional discipline, ultimately steering the country towards more sustainable borrowing practices.
He stressed that the real change lies in moving away from an obsession with the volume of borrowing.
He noted that the focus should not be on how much Bangladesh can borrow, but on how wisely it can borrow.
For Zahid, this marks a critical shift in perspective. By treating the ceiling as an opportunity to reassess priorities, Bangladesh can begin transforming its external borrowing from a measure of size to one of quality and prudence.