The International Monetary Fund (IMF) has asked Bangladesh Bank (BB) to disclose detailed and complete information regarding bad and risky loans in the public interest. A 10-Member IMF delegation is in Dhaka to review the progress before the disbursement of the third installment of the $4.7 billion loan taken by Bangladesh to review the overall economic situation.
In the meeting on Sunday, the delegation asked to make the financial health of the banks and the inspection report open to the customers. At the same time, it urged to increase the number of inspections to prevent irregularities-corruption and loan scams.
Bangladesh officials concerned in the meeting said that bad loans or risky assets are increasing in banks due to various irregularities including big loan scams. Several banks have weakened which was also acknowledged by the BB Governor.
The IMF delegation has also recommended to abolish VAT and income tax exemptions in various areas in order to accelerate revenue collections from the next fiscal year. At least 33 industries have been enjoying tax rebate facilities at various rates for up to 10 years.
During a meeting with the National Board of Revenue (NBR) in Dhaka, the visiting mission of the IMF also proposed imposition of a 15 percent VAT on all businesses with over 3 crore Taka annual turnover and offering them input tax credits.
Bangladesh’s revenue collection as a share of GDP is very low and significantly below peers. This has significantly reduced the fiscal space necessary for critical public investments and social sector spending.
The IMF team also made recommendations to Bangladesh for short and medium-term reforms in the next budget and called for fresh measures that would fetch more revenues in FY25.
