To grant the loan amount, IMF put forward some reform priorities, which include raising the tax-to-gross domestic product (GDP) ratio, modernising monetary policy framework, improving business climate and mobilising additional financing to meet the spending needs.

Exchange rate flexibility, enhancing governance and regulatory framework in the financial sector, developing capital markets, boosting growth potential and building climate resilience are other priorities cited by the IMF.

The preliminary agreement would need approval from the IMF board in Washington, DC.

An IMF staff-level mission reached the agreement with the Bangladesh government after a 15-day visit.

The funds will be available in seven instalments by 2026, with the first instalment of $447 million arriving in February. The rest will come in six instalments, each amounting to $559 million.

With floating interest rate in nature, the average rate on the loans will be 2.2 per cent, finance minister AHM Mustafa Kamal was quoted as saying by Bangla media reports.

An IMF statement said higher revenue mobilisation and rationalisation of expenditures will allow increasing growth-enhancing spending. "The impact on the vulnerable will be mitigated by higher social spending and better-targeted social-safety- net programmes."

"The monetary stance will be guided by the inflation outlook. Monetary policy modernisation will promote macroeconomic stability and improve policy transmission. Increased exchange-rate flexibility will help buffer external shocks," it added.

Fibre2Fashion News Desk (KD)