Finance Adviser: IMF Worried Over Weak Revenue Collection

Finance Adviser: IMF Focused on Bangladesh's Low Revenue and Economic Reforms

Finance Adviser Dr. Salehuddin Ahmed stated on Sunday that the International Monetary Fund (IMF) has expressed particular concern about Bangladesh’s inadequate revenue generation.

“Today’s (Sunday) discussion centered on revenue potential, the size of the upcoming budget, and the anticipated deficit,” Dr. Ahmed told reporters following a meeting with IMF delegates at the secretariat.

He emphasized the importance of ongoing reforms in the banking sector, noting that the need for a law to manage non-performing loans was also discussed.

When asked about the IMF’s conditions for releasing the fourth and fifth tranches of its loan programme, he said the focus remains on boosting tax revenue, stabilising the exchange rate, and cutting the budget deficit.

He added that both the exchange rate and the country’s foreign exchange reserves were part of the talks.

Regarding the loan's fourth tranche, Dr. Ahmed said, “We are optimistic.” He noted that the IMF team would return to Washington for further review before offering their final opinion. A follow-up meeting is set for April 19, with a broader review likely around May or June.

He stressed that the final loan decision would follow this review and be based on IMF recommendations.

Asked about the IMF's view on the current government's handling of the economy, Dr. Ahmed said the country's economic condition is stable and progressing well.

On whether the IMF is demanding tough sacrifices, he said, “We are taking necessary actions not because the IMF demands them, but because our economy needs these reforms.”

Dr. Ahmed highlighted the urgency of reforms in banking, tackling non-performing loans, and enhancing revenue generation as critical for national interest.

Addressing revenue issues, he pointed out the presence of tax leakages and stressed the need to raise the tax-to-GDP ratio and broaden the tax base. He criticized the practice of filing tax returns with zero income despite evident earnings.

He also noted that, according to the IMF team, Bangladesh lags behind Nepal and Sri Lanka in tax-to-GDP performance.

On introducing a unified VAT rate, Dr. Ahmed said, “We aim to move in that direction, but it can’t be implemented immediately.”