IMF's fourth tranche of loan further delayed: Finance Adviser

The International Monetary Fund (IMF) has further delayed the release of $645 million in the fourth tranche of the ongoing loan programme. The proposal to release the fourth and fifth tranches will be presented to the organization's executive board meeting in June, Finance Adviser Dr. Salehuddin Ahmed said.

He made these remarks at the end of the second session of the Deputy Commissioner (DC) Conference on the Ministry of Finance at the Osmani Memorial Auditorium in the capital on Monday.

The adviser said, "We have said that we have some work to do. We are not in such a hurry. Let me tell you one thing, you are thinking that we will beg for it, but in fact, we will comply with many conditions and on our own insistence. If we say there are some conditions, we will comply, that is not true. Now our macroeconomic situation is good. The current account, financial account and expatriate income are good. We are not getting desperate."

Asked whether the IMF board will be proposing the release of the fourth and fifth tranches next March, he said, "No, we are saying we will wait a little, the fourth and fifth tranches will be proposed together next June."

The proposal for the release of the fourth tranche was initially scheduled to be presented at the organization's executive board meeting on February 5, but in the first phase, it was postponed to March 12. In the second phase, it was further postponed to June. If the board approves, the two tranches can be released together a few days later.

Bangladesh has to fulfill certain conditions under the IMF loan program to receive each tranche. Among the various conditions given for the fourth tranche last June, all conditions except tax collection have been met. Before releasing the fourth tranche, a 13-member IMF delegation visited Dhaka on December 3 to see the progress of implementing the conditions. A senior official of the Finance Ministry said that the issue of increasing tax collection was repeatedly given great importance in the delegation's meeting.

He also said that the tax collection target could not be achieved not only for the fourth tranche, but also in the previous tranches.

Sources said that the IMF delegation pressed for increasing revenue by reducing tax exemptions. At the same time, the tax-GDP ratio was given a new condition of increasing by 0.2 percent with an annual increase of 0.5 percent. The government negotiated on this condition. As a strategy to collect additional revenue, the government increased the value-added tax (VAT) or supplementary duty on more than 100 goods and services in the middle of the fiscal year amid high inflation. However, such decisions of the government during a period of high inflation met with adverse reactions. Criticism started from various quarters. As a result, duties on about 10 goods and services were reduced to some extent.