Home ›› 26 Apr 2023 ›› Front
Meeting the June 2023 deadline for implementing the reforms as part of meeting the conditions set by the International Monetary Fund (IMF) under its $4.7 billion loan programme will be difficult for Bangladesh, officials concerned have said.
Reaching a net reserve threshold of $24.46 billion and collecting Tk 3,45,000 crore in revenue within June as recommended by the IMF will be challenging, they told The Business Post following a meeting with an IMF review team on Tuesday.
According to officials of the Bangladesh Bank and the National Revenue Board (NBR), the IMF will consider releasing the next instalment of its loan if the country can reach a net foreign exchange reserve of $23 billion within the set deadline while any amount less than that will not be acceptable.
A five-member IMF staff consultation team, led by Rahul Anand, division chief in the IMF’s Asia and Pacific Department, is currently in Dhaka on a 13-day visit to review the country’s progress in meeting its 38 loan conditions. The team will stay in the country till May 7.
On the first day, the team held separate meetings with Senior Finance Secretary Fatima Yasmin and Governor of the Bang-ladesh Bank Abdur Rauf Talukder.
According to the central bank data published before Eid-ul-Fitr, Bangladesh’s net foreign exchange reserves on April 17 were slightly above $20 billion.
It will be very difficult to increase the amount by $4.4 billion by the deadline to reach the target of $24 billion, officials said.
Finance Division officials said if the Bangladesh Bank fails to meet the conditions set for June, it must meet the conditions for September, when it will have to reach a net reserve of $25.316 billion.
During the first review following the approval of the loan programme in January, the IMF will see whether Bangladesh is taking appropriate steps in various areas, including the upcoming budget, to meet the conditions. The international lender will provide further recommendations if it finds any shortcoming.
Seeking anonymity, three officials of the Finance Division told The Business Post that with regards to meeting the IMF deadline, a lot is depending on remittance inflow. They said remittance inflow is currently good and it is expected to increase during Eid-ul-Azha. Also, the government will set the prices of fuel by December to reduce subsidies.
A second review will be conducted in October before the second tranche of the loan is scheduled to be released. The IMF released the first instalment of $476.27 million in February.
Meanwhile, Bangladesh failed to meet the floor of the net reserve for March set by the IMF at $22.947 billion. The lender set the floor at $24.462 billion for June, $25.316 billion for September, and $26.411 billion for December.
On Tuesday, during its meetings with various departments of the government institutions concerned, the IMF team rec-ommended 10 methods for increasing taxes and meeting the target of reserves within the stipulated time.
The team also inquired about the progress in the use of the loan and the updated information on various economic indica-tors of Bangladesh. They are expected to give an official statement in this regard before wrapping up their visit.
Meanwhile, the IMF team is scheduled for a meeting with the NBR on Wednesday (today), where the lender is expected to recommend 10 methods for increasing revenue collection.
According to sources, the methods include electronic fiscal devices, income tax, expanding the tax net, and automation. According to the conditions set by the IMF, the NBR’s income needs to be increased by 0.5 per cent to Tk 3,45,000 crore by June.
However, the income of NBR till February was Tk 1,96,037 crore in the ongoing fiscal year. NBR officials said it is challeng-ing to meet the target in the remaining months of this fiscal year.
