IMF recommends smaller budget for Bangladesh
The International Monetary Fund (IMF) has advised Bangladesh to adopt a smaller budget size for the upcoming financial year, emphasising the need to keep the budget deficit low and increase revenue collection.
According to media reports, an IMF delegation recently visited Dhaka to evaluate Bangladesh’s adherence to the conditions associated with the IMF loan provided to the country. During discussions with the finance department, the IMF delegation put forth their recommendations.
The Bangladesh delegation, led by finance secretary Md Khairuzzaman Mozumder, engaged in dialogues with Chris Papageorgiou, who heads the development macroeconomics division in the IMF’s research department. In addition to the meetings with the finance department, the IMF delegation also conferred with representatives from the Bangladesh Bank, the nation’s central bank.
The loan conditions set by the IMF, established when a 4.7 billion US dollar loan was approved on January 30, last year, include directives aimed at augmenting revenue and instituting reforms in the banking sector. Bangladesh has already received more than $1 billion in two installments, with the third installment anticipated by the end of the previous month.
Reports indicate that Bangladesh had already planned to curb the growth of the budget even prior to receiving the IMF’s recommendations. While the budget typically experiences an annual increase of 12 to 13 percent, this year’s growth is anticipated to be less than 5 percent.
The IMF has emphasized the significance of reducing the budget deficit, which, including grants, amounted to 5.2 percent of GDP in the current fiscal year. The IMF has advised keeping this deficit below 4.6 percent by year-end.
Furthermore, the IMF has outlined conditions for enhancing the tax-to-GDP ratio by 0.5 percent annually, with the finance department reportedly assuring the IMF of its dedication to achieving this objective.
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