IMF to inquire about measures on reducing fuel, fertiliser subsidies
An IMF team to arrive in Dhaka today
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas/File Photo
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The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas/File Photo
The International Monetary Fund (IMF) mission, during its weeklong visit beginning today, will seek details on the government’s measures to raise fuel and fertiliser prices while reducing subsidies in these sectors.
The IMF, which is providing a $4.7 billion loan to Bangladesh, will also inquire about the government’s plan to clear outstanding subsidies for gas, electricity, and fertilisers, according to finance officials.
The mission is arriving in Dhaka to review the progress of the loan conditions up to June, ahead of the disbursement of the fourth instalment scheduled for December.
During its visit till 30 September, the mission will hold meetings with officials of the central bank, finance ministry, and other relevant ministries, they said.
In January last year, the government signed the $4.7 billion loan agreement with the IMF. So far, Bangladesh has received around $2.3 billion of the amount in three instalments.
The IMF also disbursed more funds than initially agreed upon in the previous instalment, based on Bangladesh’s needs. Officials at the ministry of finance are optimistic that the fourth instalment in December will also include additional funds.
After the interim government had taken charge, the finance ministry and the central bank submitted a proposal to the IMF for an additional $3 billion loan.
Discussions regarding this new proposal, along with the implementation of conditions from the existing loan, are expected during the mission’s visit.
However, the primary discussion on the new loan will take place during the IMF’s annual meeting in October, where the finance adviser and the central bank governor will meet with the IMF’s managing director.
Infograph: TBS
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Infograph: TBS
Mission’s meetings
Before the IMF mission’s visit, the lender provided the government with a detailed outline of the topics to be discussed, allowing the ministries to prepare accordingly.
According to the proposed meeting schedule sent by the IMF to the finance ministry, the mission will begin its work this morning with a meeting with Finance Adviser Salehuddin Ahmed.
The discussion will focus on the “outlook for the current fiscal year, near-term priorities, the authorities’ commitments under the IMF-supported program, and planned fiscal reforms”.
Later, the IMF mission will meet with the finance division secretary, officials from the budget wing, and other relevant officials. The meeting will cover last fiscal year’s budget performance, including detailed revenue and expenditure outcomes, ADP and non-ADP capital spending, goods and services, subsidies and transfers, domestic interest payments, the status of subsidy arrears accumulated in FY24, and projected subsidies for FY25.
To review the government’s debt situation, the IMF will hold a separate meeting with the finance division’s debt management team. The discussion will include the domestic public debt stock for FY24, the composition of domestic financing for FY25, and projections for FY25-FY27, as well as government-guaranteed and non-concessional borrowing.
Tomorrow, the IMF team will hold a meeting on subsidies and social protection. It will ask for information on last fiscal year’s subsidies for fertiliser, fuel, electricity, and state-owned enterprises, along with details on future subsidy spending.
The IMF team will also inquire about the government’s plans to reduce subsidies by raising the prices of fuel and fertiliser, its strategy to clear outstanding subsidies, and plans for expanding and improving the targeting of social safety nets.
On Thursday, the IMF will meet with the chairman of the National Board of Revenue and members of the income tax, VAT, and customs departments.
The discussion will include a backward-looking assessment of FY24 tax collections and a forward-looking commitment to tax measures under the IMF-supported programme as well as plans for FY25 and FY26, and a joint domestic revenue mobilisation initiative by the IMF and the World Bank.
The IMF will hold separate meetings with NBR members from VAT, customs, and income tax. Besides, the IMF will meet officials of the labour ministry to discuss employment creation plans for the current fiscal year.
