[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Aziz Mohammad Bhai buys 27 lakh new shares of Olympic Industries

He now holds 17 percent or Tk 499 crore worth of shares of the company

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Aziz Mohammad Bhai buys 27 lakh new shares of Olympic Industries
He now holds 17 percent or Tk 499 crore worth of shares of the company

Aziz Mohammad Bhai, chairman of Olympic Industries, has completed purchasing 27 lakh new shares of the company at prevailing market price through the Dhaka Stock Exchange (DSE).

With the purchase, he now holds 17 percent shares of the company at the end of June 2023.

The value of the 3.37 crore shares he presently owns stands at Tk 499 crore, according to a posting of Olympic Industries on the DSE website today.

Of the 19.99 crore shares of the company, directors and sponsors now hold 44.66 percent shares, foreign shareholders 23.96 percent, general investors 11.51 percent and institutional investors 19.87 percent as on June 30 of 2023.

The largest biscuit maker in Bangladesh made a profit of Tk 155.6 crore in the 2022-23 fiscal year ending on June 30, up 29 percent year-on-year, according to the company's annual report for 2023.

The share price of Olympic has been experiencing a falling trend. In the last one year, its highest price was Tk 176.8 on April 26 of 2023 and the lowest Tk 141.2 on November 27 same year.

Today, Olympic shares ended the day at Tk 148, down 0.54 percent from the previous day.

The stock investors feel encouraged when an owner purchases shares of a company amid a price falling trend, said Mohammad Emran Hasan, managing director and chief executive officer of Investit Asset Management.

"When a sponsor purchases shares of his/her own company, it means the person has confidence in the company's stocks and it gives confidence to the small investors."

The investors who have available cash should invest ideal money on the stock market during a falling trend, because within a few months the prices will rise again, he said.​

 

[Saif]

Bangladesh govt's debt servicing for foreign loan soars

In the July-March period of the fiscal year 2023-24, the government paid $1.05 billion, which is 117 percent higher year on year

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Bangladesh govt's debt servicing for foreign loan soars
Interest payment crosses $1 billion mark for the first time

Bangladesh's foreign debt servicing surged by 49 percent, driven by a spiralling interest payment that crossed the $1 billion mark for the first time. This increase is due to the country's rising borrowing from high-interest sources.

In the July-March period of the fiscal year 2023-24, the government paid $1.05 billion in interest, which is 117 percent higher than the $485 million it paid during the same period a year ago. This data was released by the Economic Relations Division (ERD) yesterday.

During the same period, the repayment of the principal amount of foreign loans rose by 22 percent year on year to $1.5 billion.

Overall, debt servicing soared by 49 percent to $2.57 billion in the July-March period of FY24, compared to the same period a year ago.

The pressure on loan servicing is rising with the government's increased borrowing to finance large infrastructure projects. These projects include the Dhaka Metro Rail, Matarbari Coal Power Plant, and Rooppur Nuclear Power Plant, funded by bilateral and multilateral sources.

As of December 2023, the external debt of the Bangladesh government stood at $79.6 billion. This figure was approximately over 13.7 percent of the nation's Gross Domestic Product in the fiscal year 2022-23.

In recent years, the government has borrowed a good amount of money from multilateral agencies. This was done to help the economy navigate the crisis caused by the coronavirus pandemic and the global economic turmoil following the Russia-Ukraine war.

Officials have stated that loans taken from foreign sources now have a shorter grace period. Additionally, interest rates are now tied to the global reference rate -- the Secured Overnight Financing Rate (SOFR). This rate replaced the London Interbank Offered Rate (Libor) last year.

In recent periods, the SOFR rate has seen an increase.

Official data revealed that Bangladesh paid $935 million in interest payments in FY23, nearly double the $491 million paid a year ago.

The latest data from the Economic Relations Division (ERD) showed that the overall commitment from foreign lenders grew by 135 percent year on year to $7.2 billion in the July-March period of FY24. However, disbursement only increased by 5 percent year on year to $5.6 billion in the nine months leading up to the end of March 24.​

 

[Saif]

3rd Loan Tranche: IMF team to focus on four key areas

During its visit to Dhaka, the International Monetary Fund’s review mission will focus on Bangladesh’s foreign exchange reserves, inflation rate, banking sector, and revenue reforms.

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3rd Loan Tranche: IMF team to focus on four key areas
Forex reserves, inflation, banking sector, revenue reforms to come up for talks

During its visit to Dhaka, the International Monetary Fund's review mission will focus on Bangladesh's foreign exchange reserves, inflation rate, banking sector, and revenue reforms.

The 10-member IMF mission is scheduled to reach Dhaka today, and from tomorrow, it will begin to hold meetings with the finance division, Bangladesh Bank, the National Board of Revenue, and other government bodies.

The mission will stay in Dhaka until May 8. The IMF has already sent more than 100 questions to the government officials.

Since the IMF approved the $4.7 billion loan for Bangladesh in January last year, the multilateral lender has so far released $1.16 billion in two tranches.

Bangladesh sought the loan amid a crisis of forex reserves.

However, the reserves have not improved since the loan programme commenced. The country's gross forex reserves have been around $20 billion in recent months, as per an IMF calculation.

One of IMF's major conditions for the loan is that Bangladesh maintain a certain net international reserves (NIR). Bangladesh failed to meet it in the first review, and is going to fail this time again.

Besides, inflation has been over nine percent since March last year.

During a press briefing on the sidelines of the Spring Meetings of the World Bank Group and IMF in Washington, DC on April 18, IMF's Asia and Pacific Director Krishna Srinivasan said Bangladesh's reserve position has not improved much.

Referring to Bangladesh's elections, he said, when elections take place, there's always some uncertainty about prospects. This affected part of the financial account, he added.

"But also, I think it's important for Bangladesh to transition to a more flexible exchange rate regime. That will be important to build external resilience and build buffers and build reserves. So, I think that is the area where engagement and dialogue continues in terms of allowing the exchange rate to be more flexible so that reserves can be built up, so that, in a sense, will be a key priority for the country going forward," he said.

For macroeconomic stability, the visiting IMF mission will discuss matters related to fuel, power and energy subsidies, public debt, upcoming budget, and performance of the state-owned enterprises.

For over a decade, Bangladesh's revenue collection has been around eight to nine percent of the GDP. The IMF loan programme has several reform proposals for the revenue sector.

Also, several reform proposals for the banking sector and their progress including implementation of the bank company act will be discussed during the IMF mission's visit.​

 

[Saif]

IMF suggests raising power, gas and fertiliser prices

The International Monetary Fund yesterday recommended reducing government subsidies by hiking prices of power, gas and fertiliser, and spending the saved money on society safety net programmes.

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IMF suggests raising power, gas and fertiliser prices

The International Monetary Fund yesterday recommended reducing government subsidies by hiking prices of power, gas and fertiliser, and spending the saved money on society safety net programmes.

The visiting IMF mission, during a meeting with finance ministry officials, also recommended the inclusion of more poor people in the programmes and better monthly allowances for them.

The mission, led by Chris Papageorgiou, held a series of meetings with the officials of the Finance Division and the Financial Institutions Division yesterday. It also discussed the government's macroeconomic framework, implementation of laws related to the banking sector and financial institutions, classified loans, and Bangladesh Bank's move to merge banks.

Finance ministry officials said the government has decided to gradually hike the prices of power and gas over the next three years to the level of their production costs.

The measures would be implemented so that the government does not have to subsidise the sectors, said an official. The official, however, said the government has no plans now to increase fertiliser prices.

The IMF mission during a meeting with the Finance Division was told that the government would continue subsidising the agriculture sector.

After entering into the IMF's $4.7 billion loan programme in January last year, the government hiked the prices of electricity and gas several times. It had increased the price of urea fertiliser by 5 percent in August 2022, after 11 years.

Since the 2022-23 fiscal year, the government's subsidy on electricity, gas and fertiliser nearly doubled.

In the current fiscal year, subsidy allocation is Tk 84,542 crore and it could be about the same next year, Finance Division officials told the IMF mission.

The IMF wanted to know whether the government had any plans to increase allowance for the poor under social safety net programmes and what the government was planning next regarding the programmes.

Officials told the mission that they were going to increase the number of beneficiaries by around five lakh but there were no plans to improve the allowances due to fund constraints.

About 58 lakh elderly people are getting Tk 600 per month in the current fiscal year. Their number will be increased by two lakh in the next fiscal year.

All eligible senior citizens are getting the benefit in 262 upazilas. All eligible individuals in the remaining 233 upazilas will be brought under the scheme gradually.

The officials said about 2.5 percent of the GDP would be allocated for society safety net programmes next fiscal year.

The finance ministry issued two circulars to bring all safety net programmes under a new structure to reduce waste, misuse, and corruption.

The IMF mission, during its meeting with the Financial Institutions Division officials, said it supported the policy of merging banks and laid importance on following international best practices while implementing the move. It said India took a similar move and it yielded good results.

The IMF mission recommended reducing state-owned banks' classified loans to 10 percent from over 20 percent and wanted to know what action the government was taking against wilful loan defaulters, meeting sources said.

The officials told the mission that commercial banks would send lists of wilful defaulters to the central bank and the central bank would take action as per the bank company law.

During another meeting, the Finance Division presented the country's macroeconomic projection before the IMF mission, sources said.

The officials told the IMF mission that they revised the GDP growth to 6.5 percent from 7.5 percent for the current fiscal year. The inflation target was revised to 8 percent from 6.5 percent.

The next fiscal year's GDP growth target is 6.75 percent and the inflation target is 6.5 percent, they said.

The IMF said the targets were challenging and laid importance on introducing market-based interest and exchange rates.

The IMF mission is in Dhaka for its second review of the $4.7 billion loan programme before releasing the third tranche. Since it approved the loan in January last year, the multilateral lender has released $1.16 billion in two tranches. The release of the third tranche would depend on the outcome of this visit.​

 

[Saif]

Expectations for a good budget

How do you define a good budget? Should it be all-inclusive? Should it be too large? Or should it only focus on the possible future of the nation and allocate more to education and healthcare?

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Expectations for a good budget

How do you define a good budget? Should it be all-inclusive? Should it be too large? Or should it only focus on the possible future of the nation and allocate more to education and healthcare?

One may also argue for creating more space for the people belonging to the bottom of the pyramid by expanding the social safety net.

With a lot of historic pinches on our revenue earnings as well as earnings from external sources, we all possibly agree on applying a bit more caution while delineating the fund deployment or allocation strategy through budget formulation and management of resources.

Senior citizens and development partners are already talking about maintaining austerity in government expenditures. In a country facing a revenue shortfall, there is no doubt that an all-out drive should be given to revenue generation.

However, as many agencies have recommended, given inflationary pressure, the ceiling for tax-free individual income should be increased. This, on the face of it, may deprive the government from some tax revenue but this can easily be made up by efficient taxation and management and relooking at the tax exemption parameters.

First, the collection should be improved through the adoption of various means followed in similar countries. Second, some sectors have been getting tax exemptions for many years. There should no doubt be an end to that. There must be a sunset clause to end such tax exemption.

This will also help the government to prepare for its graduation from the least-developed country category which is due in 2026. Following graduation, such discretionary tax exemption will not be possible.

The tax structure should also be made progressive and reliant more on direct tax rather than indirect tax, which impacts the poorer section largely.

The other part of the budget is expenditure. Given high inflation, the budget for fiscal year 2024-25 should be contractionary. This calls for prioritising projects that are critically important and employment-creating. Policy-makers should pick only a few high-impact projects and smaller or less important projects should get less attention.

The operational cost should be kept to a minimum by looking more diligently at the wastage side of it. Next comes the mostly politically motivated block allocation. Though I don't have a correct recipe, the time has possibly come to rethink the use of public offices or resources for personal wealth-building or siphoning off money abroad.

Enough allocation must be kept for social safety net programmes for the downtrodden people.

Choosing the right projects with well-trained project managers and getting those revalidated by the expert groups have been discussed for a long time. We need to walk the talk now. It is for the greater interest of public good and better utilisation of hard-earned public money.

The budget for the next fiscal year comes at a critical juncture as the government has targeted higher economic growth. On the other hand, the economy is faced with several challenges, including high inflation, low revenue collection, the volatile exchange rate, and declining forex reserves.

Therefore, the budgetary measures should show the way to overcome these challenges. It is not the time to experiment with too many avenues or to be too hung up on growth phobia.

Like the corporate bodies, the government may also try to follow the norm -- earn money, spend money and spend more money to generate investment and thereby employment. Any penny saved should go for future nation-building through education and healthcare.

The author is an economic analyst.​

 

[Saif]

Bangladesh enjoys better economic stability than Pakistan: Shehbaz Sharif

Commenting on Bangladesh’s economic growth, Pakistan Prime Minister Shehbaz Sharif has said although the then ‘West Pakistan’ once considered ‘East Pakistan’ as a burden, independent Bangladesh has made tremendous strides in industrial growth. According to Shehbaz Sha

thefinancialexpress.com.bd

Bangladesh enjoys better economic stability than Pakistan: Shehbaz Sharif
FE ONLINE DESK
Published :
Apr 27, 2024 11:19
Updated :
Apr 27, 2024 11:19

Commenting on Bangladesh's economic growth, Pakistan Prime Minister Shehbaz Sharif has said although the then 'West Pakistan' once considered 'East Pakistan' as a burden, independent Bangladesh has made tremendous strides in industrial growth.

According to Shehbaz Sharif, Bangladesh now enjoys better economic stability than his own country.

During recent interactive session with the business leaders of Pakistan, Sharif recalled, "I was quite young when... we were told that it's a burden on our shoulders...Today you all know where that 'burden' has reached (in terms of economic growth)."

"And we feel ashamed when we look towards them," he added.​

 

[Saif]

Banks asked to increase forex inflow

Bangladesh Bank today sat with five leading private commercial banks

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Banks asked to increase forex inflow
Bangladesh Bank today sat with five leading private commercial banks

Bangladesh Bank has asked managing directors of different banks to find out ways to raise foreign currency inflow to give a boost to the country depleting forex reserves.

They were also ordered to bring foreign currencies through banks' offshore banking units as the central bank has recently relaxed the rules for such units.

Bangladesh Bank Governor Abdur Rouf Talukder made the call in a meeting with the managing directors of five leading private commercial banks— Brac, City, Eastern, Mutual Trust and Dutch-Bangla—at the BB headquarters in Dhaka today.

Bangladesh has huge payments to make in the days to come, but its forex reserves continue to fall, as it stood at $19.97 billion as on April 24, down from $23.3 billion in July 26 of last year, BB data showed.

Meanwhile, the Offshore Banking Act 2024 passed in parliament on March 5 has barred the government to charge any tax on the profits that foreigners make in the offshore banking units of Bangladeshi banks.​

 

[Saif]

Rationalise tariff to protect local industry

Entrepreneurs yesterday emphasised the need to follow Bangladesh’s tariff policy when imposing duties on imported goods.

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Rationalise tariff to protect local industry
Entrepreneurs demand

Entrepreneurs yesterday emphasised the need to follow Bangladesh's tariff policy when imposing duties on imported goods.

They raised the issue at a seminar, titled "Role of Bangladesh Trade and Tariff Commission in protecting interests of local industries".

The event was organised by the Chittagong Chamber of Commerce and Industry (CCCI) at the World Trade Centre in the port city.

Omar Hazzaz, president of the CCCI, chaired the event while Ahmed Munirus Saleheen, chairman of the Bangladesh Trade and Tariff Commission, spoke as chief guest.

Shish Haider Chowdhury, a member of the commission, presented a paper while Customs Commissioner Faizur Rahman spoke as special guest.

Speakers also highlighted the need to protect local industries and also requested the commission to rationalise tariffs so that local industries can do better.​

 

[Saif]

IMF Loan: Govt may miss two key targets set for fourth tranche

The government is likely to ask the International Monetary Fund (IMF) to revise down two key targets related to Net International Reserves (NIR) and tax revenue collection, set for June this year for the release of the fourth tranche of its $4.7 billion loan, finance ministry officials said.

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IMF Loan: Govt may miss two key targets set for fourth tranche

The government is likely to ask the International Monetary Fund (IMF) to revise down two key targets related to Net International Reserves (NIR) and tax revenue collection, set for June this year for the release of the fourth tranche of its $4.7 billion loan, finance ministry officials said.

An eight-member IMF mission, led by Chris Papageorgiou, has been in Dhaka since April 24 for the second review of the loan programme before releasing the third tranche worth $681 million, expected in June.

The mission held a series of meetings with key government bodies, including the finance ministry, Bangladesh Bank and National Board of Revenue (NBR) over the last few days, and is now assessing Bangladesh's progress related to the conditions set for the third tranche.

The meetings also discussed the key conditions for the fourth and fifth tranches, officials said.

The fourth tranche is expected in December this year.

Yesterday, the IMF mission held a meeting with government officials and came up with a mid-term review on the outcome of the meetings held in the past few days.

Already, finance ministry and Bangladesh Bank officials communicated with the IMF mission that the government may fail to meet the NIR and revenue collection targets set for the fourth tranche on time.

For the third tranche, Bangladesh has met all but one conditions related to NIR set for December last year. The revised NIR target was $17.78 billion in December, but the country fell short by $58 million.

For the fourth tranche, the IMF set the NIR target for June this year at $20.1 billion.

As its loan condition, IMF considers NIR by deducting about $3 billion from the gross reserves. So, if Bangladesh is to meet the $20.1 billion NIR condition, its gross reserves have to cross $23 billion in June.

However, the reserve situation has not improved much since the commencement of the loan programme January last year. The country's gross forex reserves have been around $20 billion in recent months, as per an IMF calculation. It was $19.97 billion on April 24.

The government had expected the reserve to improve after the January 7 election, but it did not.

The central bank blames it on the huge deficit of financial account of balance of payment, which crossed $8 billion in the first eight months of the current fiscal year.

According to the IMF assessment, the reason behind the deficit in the financial account is that the exchange rate is not market-based. As a result, export proceeds are not coming to the country while remittances are coming through unofficial channels.

A finance ministry official said even if IMF revised down the NIR condition, it could put various conditions to make the exchange rate market-oriented.

Meanwhile, although Bangladesh has met the floor tax revenue collection target for the third tranche, it may fail to meet the target of collecting Tk 3,94,530 crore by June set for the fourth tranche, finance ministry sources said.

To meet the June target, 20.39 percent growth in tax revenue collection is required. However, in the first seven months of the current fiscal year, tax revenue collection growth was 12 percent.

As per the finance ministry estimate, highest Tk 3,80,000 crore could be collected by the end of June.

For the $4.7 billion loan, the IMF has set two types of conditions -- six performance conditions and several structural conditions.

For the next tranches, the government has been discussing structural conditions with IMF.

A finance ministry official said IMF may set a condition for the government to reduce its spending on subsidy.

The government has already introduced an automated pricing formula for fuel as it no longer subsidises the sector.

However, as the government still provides subsidy for electricity and gas, the IMF may set conditions to follow a timeline for gradually reducing subsidy for these two items.

Already, IMF has collected data on government spending in subsidy for electricity and gas.

The global lender has also put several conditions for NBR to increase revenue collection.

Under one condition, NBR has to finalise its medium- and long-term revenue strategies covering indirect and direct taxes and accompanying implementation framework by September this year.

Another condition is requirement of e-return filing and online payment for tax years starting after June 30, 2024, for all large corporations and any corporation that claims any tax performance (such as an exemption, lower tax rate, or tax holiday) by the end of June 2025.

Also, IMF may put a condition to reduce default loan including setting a ceiling on the percentage of classified loan.​

 

[Saif]

Move to check forex reserve depletion: Govt wooing quick release of foreign loan

Breaking News, International News & Multimedia

thedailynewnation.com

Move to check forex reserve depletion: Govt wooing quick release of foreign loan
30 Apr 2024, 12:00 am

Staff Reporter :

The government is waxing its policy to obtain more foreign loans as a strategic measure to prevent the depletion of the country's foreign exchange reserves and to bolster the supply of dollars.

The Economic Relations Department (ERD) under the Finance Ministry is actively engaging with development partners, aiming to secure at least $1 billion from pledged foreign loans by June.

Ministry officials have disclosed that they are urging development partners to expedite the disbursement process for pledged funds from foreign-funded projects, emphasising the need for ease and speed in accessing these funds.

Additionally, the government is vigorously advocating for flexible or low-interest loans and assistance. Furthermore, there are plans to expand the scope of acquiring hard-term or rigid loans to strengthen foreign exchange management.

Despite efforts to address the ongoing dollar crisis, which has persisted for more than two years, challenges remain.

Remittance flows and export earnings are not showing significant improvement to alleviate the crisis. Meanwhile, the inability to reduce the cost of imports exacerbates the dollar shortage, posing a significant challenge for policymakers, especially with the government facing a current account deficit.

Given the circumstances, external borrowing is viewed as a viable solution to mitigate the deficit. Over the past few years, the government has increasingly leaned towards securing hard loans, a trend that is expected to continue, according to ERD officials.

At the same time, initiatives have been taken to increase the flow of foreign currency to deal with the long-standing dollar crisis in the country, implement foreign-aided projects, and speed up loan repayments, they said.

Policymakers believe that the quick disbursement of the loans will help to increase foreign exchange reserves as well as the dollar supply in the country.

Meanwhile, the Planning Commission feels that proper utilisation of foreign loans and grants plays a helpful role in maintaining sustainable growth and a balanced trade situation.

Economists said that it is very important to take measures to disburse the foreign aid at the time, as there is no alternative to increasing the supply of dollars to overcome the dollar crisis and to maintain foreign exchange reserves.

Dr. Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation, "As the reserves are not growing much relying on remittances and export earnings, the government has no alternative to being dependent on foreign loans. If the flow of foreign loans rises, the flow of dollars in the country will increase."

According to the latest report prepared by the ERD on the current situation of the country's foreign debt, the Asian Development Bank (ADB) is at the top of the list of foreign loan disbursements to Bangladesh.
ADB disbursed $1.4 billion in the first nine months (July–March) of the current fiscal year.

Japan is in second place, as the country gave $1.35 billion. The World Bank, which is in third place, has released $0.96 billion. Russia and China are ranked fourth and fifth, respectively. These two countries have disbursed $0.8 billion and $0.36 billion, respectively, during the mentioned period.​

 

[Saif]

IMF prescribes ending tax exemptions

It recommended the National Board of Revenue (NBR) discontinue the tax holiday for the information and communication technology industry and abolish the tax benefit for mining and petroleum extracting companies.

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IMF prescribes ending tax exemptions

The International Monetary Fund (IMF) has prescribed that Bangladesh must abolish VAT and income tax exemptions in various areas in order to accelerate revenue collections from the next fiscal year.

It recommended the National Board of Revenue (NBR) discontinue the tax holiday for the information and communication technology industry and abolish the tax benefit for mining and petroleum extracting companies.

The multilateral agency also proposed imposition of a 15 percent VAT on all businesses with over Tk 3 crore annual turnover and offering them input tax credits. It suggested elimination of truncated VAT rates to accelerate overall revenue collection.

The recommendations were made by the visiting mission of the IMF during a meeting with the NBR at the latter's headquarters in Dhaka.

The delegation is in the capital to review the progress of the $4.7 billion loan programme before releasing around $681 million in the third tranche in May to help the country overcome severe economic challenges.

The team is meeting officials of the finance division, the Bangladesh Bank, the NBR and other government bodies.

Bangladesh's revenue as a share of GDP is among the lowest in the world and significantly below peers. This has significantly limited the fiscal space necessary for critical public investments and social sector spending.

As part of the conditions attached with the IMF loan approved in January last year, the NBR will have to collect Tk 394,530 crore in the current fiscal year ending in June. Until March, the tax collector raised Tk 259,866 crore, posting a 15 percent year-on-year growth.

In a presentation, the NBR's income tax wing projected to collect Tk 15,300 crore in tax in 2024-25 through policy measures, including enforcing tax compliance and limiting tax expenditures such as exemptions and rebates.

The IMF suggested the NBR scrap the VAT exemptions for clothing and footwear, liquefied petroleum gas (LPG), and mobile phone manufacturing.

At present, customers pay 7.5 percent VAT on clothing. However, they do not need to pay any VAT for sandals priced below Tk 150 a pair.

The existing VAT on LPG cylinders is 5 percent, and locally manufactured mobile phones are subject to a 2 percent to 7.5 percent VAT.

The IMF wants the NBR to replace these reduced rates with a 15 percent VAT.

If the tax administration ends the tax expenditures on clothing, footwear, LPG, mobile phones, and other products, it would provide additional taxes that are equivalent to 0.31 percent of gross domestic product (GDP), according to an estimate by the IMF presented at the meeting.

An NBR official said they would implement IMF's recommendations gradually since any abrupt move would affect domestic trade and industries.

"We must take into account the country's socio-economic situation before withdrawing tax exemptions fully."

The IMF urged the VAT wing to submit the VAT exemption report and the medium and long-term revenue strategy by June. It wants the NBR to move away from multiple VAT rates and impose a 15 percent standard rate.

The official, however, said multiple VAT rates exist in many countries, including those in the European Union.

"If they can have multiple VAT rates, why can't Bangladesh have the same? We are not avoiding the global best practices."

The Washington-based lender recommended advancing short and medium-term reforms in the next budget and called for fresh measures that would fetch revenues worth 0.5 percent of GDP in FY25.

It set new structural benchmarks for the NBR and suggested the revenue administration finalise a medium- and long-term revenue strategy covering indirect and direct taxes and an accompanying implementation framework by September this year.

The IMF called for rolling out e-return filing and the online payments facility for large corporations and companies that claim tax preferences such as exemptions, lower rates, or a tax holiday.​

 

[Saif]

Bangladesh’s financial account not performing well: IMF

The financial account of Bangladesh is not performing very well, said Krishna Srinivasan, the director of the Asia and Pacific department of the International Monetary Fund, during a virtual briefing from Singapore on Tuesday...

www.newagebd.net

Bangladesh's financial account not performing well: IMF
Bangladesh Sangbad Sangstha . Dhaka 30 April, 2024, 22:50

The financial account of Bangladesh is not performing very well, said Krishna Srinivasan, the director of the Asia and Pacific department of the International Monetary Fund, during a virtual briefing from Singapore on Tuesday.

'So, in some sense, you could see the depletion in the foreign exchange reserve, and the taka was coming under pressure,' he mentioned.

He said Bangladesh should allow greater flexibility in its exchange rate to address issues in its external account, particularly the deficit in the financial account.

'Once you implement this, you will see a greater sense of stability returning to the external account,' he added.

Srinivasan said that with reforms in the exchange rate and improvements in fiscal policy, Bangladesh should see a more sustained recovery from the crisis that every country in the region has faced due to multiple shocks.

Bangladesh has achieved significant improvement in macroeconomic performance, he said.

'Bangladesh was a country that proactively showed the IMF support for the country's home-grown programmes, which have two components — one is macroeconomic stability and the other is addressing the longer-term structural issues related to climate change. On macroeconomic performance, so far there have been significant improvements,' said Srinivasan.

He made the remarks in response to a question at the briefing on the regional economic outlook for Asia and the Pacific.

He said there have been improvements in the monetary policy framework and fiscal performance.

'I think where Bangladesh was struggling was with the current account, which was just balanced partly because there was restraint on imports,' he added.​