BD moves closer to new IMF loan

Bangladesh has made progress in discussions with the International Monetary Fund (IMF) on a possible new lending programme, with the government expecting financing arrangements with international development partners to advance its economic recovery and reform agenda within the next two to three months.

Finance and Planning Minister Amir Khasru Mahmud Chowdhury said discussions with the IMF and the World Bank on economic reforms, banking sector stability and development priorities were progressing well.

He made the remarks after meeting IMF Deputy Managing Director Nigel Clarke on Thursday on the sidelines of the IMF-World Bank Group Annual Meetings in Bangkok, Thailand.

*    Eyes loan deals for Bangladesh within 2�"3 months
*    Targets 10pc tax-GDP ratio by 2030
*    IMF raises concerns over the banking sector and the country’s low tax-to-GDP ratio. 

The minister said the IMF was satisfied with Bangladesh’s economic progress, taking into account the challenges inherited by the government and the impact of ongoing global conflicts.

Bangladesh and IMF teams had held detailed discussions over the past several days, reviewing various economic issues, he said.

The IMF had raised concerns over the banking sector and the country’s low tax-to-GDP ratio. However, progress had been made on several issues, while discussions on the remaining matters would continue in the coming months.

Regarding a new IMF programme, Amir Khasru said the discussions had gone well and the process was moving forward. He did not disclose the proposed loan amount or its terms.

Bangladesh entered an IMF programme worth $4.7 billion in January 2023 and is now seeking a new arrangement to support its economic priorities.

Prime Minister’s Adviser on Finance and Planning Professor Dr Rashed Al Mahmud Titumir said the IMF, World Bank and other development partners were willing to support Bangladesh’s reform initiatives in line with the country’s priorities and strategies.

He expressed hope that discussions with development partners would make progress on financing arrangements within the next two to three months.

Besides the IMF and World Bank, the Asian Development Bank, Islamic Development Bank and relevant agencies of China and the United States were also involved in discussions on economic reforms and financing, he said.

Titumir said the government wanted to pursue reforms based on Bangladesh’s needs while strengthening economic governance, investment and social protection.

TAX REFORMS AND ECONOMIC RECOVERY
The government aims to raise the tax-to-GDP ratio to 10 per cent by 2030 without increasing tax rates, Titumir said.
Expanding the tax net, preventing evasion and making tax administration more transparent and technology-driven would be central to achieving the target.

The government is also working to separate tax policy formulation from revenue collection as part of broader reforms to improve efficiency and accountability in revenue administration.

On banking reforms, the adviser said the government would take initiatives to improve transparency in banks’ financial statements and balance sheets and reform the necessary legal framework. It is also working to strengthen banks’ financial positions, restore discipline in the sector and protect depositors’ interests.

He noted that inflation, rising living costs and higher global energy prices had placed additional pressure on ordinary people. The government was therefore seeking to strengthen social protection through initiatives such as the Family Card and Farmers Card.