IMF Delegation In Dhaka

Bangladesh

IMF Delegation In Dhaka

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It will meet with the government to review the progress of implementing conditions such as reducing subsidies, increasing electricity prices, and making the currency exchange rate market-based. However, the government's financial advisor says that considering the current economic situation of the country, it is not possible to implement all the IMF conditions simultaneously.

Bangladesh has received $2.31 billion in three installments since the signing of the $4.7 billion loan agreement on January 30, 2023. The government is working to implement the IMF conditions to receive the remaining $2.39 billion at once, but there are several challenges in implementing the conditions.

The IMF wants Bangladesh's currency exchange rate to be market-based, which is a big challenge for the government. Additional revenue will have to be collected at the rate of 0.5 percent of GDP. This will reduce the amount of various tax exemptions. There are conditions for increasing the price of electricity, which may cause discomfort in the public mind.

However, economists are expressing concerns on behalf of the government, especially that the increase in electricity prices will increase public discontent.

Dr. Mustafizur Rahman, Honorary Fellow of CPD, said that the issue of tax incentives also needs to be re-evaluated, as it is given to various interest groups.

The inflation rate has been stuck around 9 percent since the Russia-Ukraine war in 2022, which is forcing the government to adopt new policies. There are doubts about the government's readiness, especially in terms of changing the currency exchange rate and implementing other IMF conditions. Financial Advisor Dr. Salehuddin Ahmed said, "If any decision is taken suddenly, the situation could be like Pakistan or Sri Lanka, which will be dangerous for the country."

In addition, the government has already taken steps to separate the revenue administration from the NBR's revenue policy.

Now the question is, how ready is the government to comply with the IMF conditions and how will the country's economy be affected if these conditions are implemented? The answer may be found in the results of the meetings that began on April 6.