A recheck of Bangladesh's macroeconomic situation and possible reforms, besides additional funding needs, dominate its tasks as a team of the International Monetary Fund (IMF) embarks on a weeklong mission here today.
The four-member delegation of the multilateral development financier, led by its Mission Chief for Bangladesh Chris Papageorgiou, will also look into high subsidy spending, mounting inflationary pressure, and public-expenditure cut, among others, officials said.
The post-uprising interim government has already sought $3.0 billion in additional support from the IMF as budget support apart from the ongoing $4.7-billion lending package, which will also be discussed on priority during the staff-team visit.
To grant the additional fund support the IMF team may suggest some more reform measures targeting subsidy cut and higher revenue generation, they said.
"The IMF team is concerned about power subsidy while they have little concern about agri-subsidy," a senior finance ministry official told the FE Monday.
In the last fiscal year of 2022-23, government payouts were worth some Tk 350 billion as power-sector subsidy through issuing bonds and cash payment. A similar amount also became due in the fiscal year 2023-24.
"The IMF team's other priorities are lowering inflation, raising foreign-currency reserves, and restoring macroeconomic stability," said the official, seeking anonymity.
According to officials concerned the IMF team will discuss outcome of the FY'24 budget outcome and FY'25 budget outlook, the commitments under the IMF-supported credit programme and planned fiscal reforms, the revenue and expenditure outturn, ADP spending, non-ADP capital spending, goods and services, subsidies and transfers, domestic interest payments etc.
Also, the FY'24 outcome for domestically financed development spending and priority social spending, the status of subsidy arrears accumulated in FY'24, projected subsidies in FY'25, domestic public-debt stock of FY'24 and composition of domestic financing in FY'25, external public-debt stock of FY'24 and composition of external financing and planned external-debt financing in FY'25, foreign-aid disbursements in FY'24 and expected disbursements in FY25-27, and government-guaranteed and non-concessional borrowings will also come up for discussion.
The subsidies, including on fuels, fertilisers, electricity on budget and off-budget or through state-owned enterprises in FY'24 and projection for FY24-FY26, plan to clear the accumulated arrears including bond issuance, strategy to reduce energy and fertiliser subsidies by raising prices, expansion of social programmes in FY'25 budget and future plans to expand social-safety net, and the status of Universal Pension Scheme are also on the mission agenda.
Moreover, the team will make backward-looking assessment of FY'24 tax collection and forward-looking commitment to tax-revenue measures under the IMF- supported programme, the joint domestic revenue-mobilisation initiative by the IMF and the World Bank, status of compliance risk management units (CRMUs) in customs, VAT and income tax, and plans for digital transformation of income tax administration.
The balance-of-payments developments in FY'24 and projections for FY'25, exports-imports, remittances, financial-account transactions, errors and omissions, actual and neutral real interest rates, private credit growth, financial-sector reform, exchange-rate recast, monetary-policy modernisation, and central-bank reforms will also be discussed.
Also to be laid on the table for a review are banking-sector performance and stability, non-performing loans, credit supply and demand, profitability, forex shortages, liquidity, factors affecting the forex-market balance currently and in the near term, handling external arrears, easing of Letter of Credit requirements, remittances and export flows, repatriation of export receipts, crawling peg, and expected trajectory of international reserves.
syful-islam@outlook.com