IMF believes Bangladesh’s economy is stable, on right track: Salehuddin Ahmed

Bangladesh’s economy is stable and moving in the right direction, the International Monetary Fund (IMF) believes, said Salehuddin Ahmed, adviser to the Ministry of Finance.

He, however, noted that the IMF has raised concerns over a number of issues including the need to increase foreign currency reserves, stabilise the exchange rate, and reduce the budget deficit.

“They [IMF] think Bangladesh’s economy is stable and on the right track,” said Adviser Salehuddin while speaking to reporters at the Secretariat today (6 April) following a meeting with a visiting IMF delegation.

He said the IMF is also concerned about the country’s low tax-to-GDP ratio and high number of zero tax returns.

Following the National Board of Revenue’s (NBR) unexpected tax hike in January – estimated to generate Tk12,000 crore across various goods and services – the International Monetary Fund (IMF) is now pushing for even more.

The IMF wants Bangladesh to raise an additional Tk57,000 crore in the next fiscal year by reducing exemptions and further increasing taxes. Without this, securing the fourth loan instalment – already delayed since March – as well as the upcoming fifth tranche, remains uncertain, according to NBR officials.

“According to the IMF, millions of people file zero returns in Bangladesh. Our tax-to-GDP ratio is 7.5%, while Nepal’s is 12-13% and India’s is 17-18%. We informed them of the steps we’re taking to improve the situation,” said  Salehuddin Ahmed.

The IMF also raised concerns over non-performing loan recovery and the implementation of a unified exchange rate, he added.

In response to a question regarding the next instalment of the IMF loan, Dr Salehuddin said, “We have shown our good intentions by taking steps such as improving revenue collection and leaving the exchange rate to be determined by the market. Now it’s time for the IMF to show theirs.”

He further said, “Whether the IMF provides the next tranche or not, we are doing what we need to do.”

The finance adviser added that discussions on these matters will continue between the IMF and institutions such as the National Board of Revenue and Bangladesh Bank.

“I will attend the IMF Spring Meetings on 19 April. We will continue our dialogue on these issues there. The IMF will carry out further reviews,” he said.

The adviser expressed hope that the next instalment would be released in June.