Most of PRGF programme objectives achieved: IMF

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FE Report
The International Monetary Fund (IMF) has said Bangladesh has achieved most of the objectives of the Poverty reduction Growth Facility (PRGF) supported programme.
"Most of the objectives of the PRGF-supported programme were achieved," the Washington-based multilateral lending agency said in a report.
"Inflation was largely contained, poverty has been reduced, and good progress has been made toward achieving the Millennium Development Goals," it added.
The report was released Thursday after the IMF executive board concluded the Article IV consultation with Bangladesh June 22 last.
Such IMF observation has been welcomed by the Ministry of Finance (MoF) officials, who are waiting for release of the last installment of the PRGF credit worth more than US$ 100 million.
The MoF needs the fund to meet the budgetary obligations of the just concluded fiscal year, said its officials who do not know when the fund of will be released.
"This will be clear in about week's time," one official said.
Although the IMF directors lauded the country's macroeconomic stability and continued strong growth over the past several years, they were unhappy about the poor fiscal performance due to structural weaknesses.
"Overall macroeconomic stability has been maintained, but fiscal performance continues to suffer from structural weaknesses," the IMF said.
The IMF pointed out that weak revenue collection, poor infrastructure, low skill level, and governance issue remained important impediments to sustained growth and further poverty reduction.
Its directors observed that revenue collections were insufficient to meet development needs or to support the desired reductions in tariffs and supplementary duties.
They called for a fundamental reform of the tax system by broadening the tax base, separating the responsibility for tax policy and collection, simplifying VAT and income tax legislation, and consolidating and strengthening the institutional structure of tax administration.
Welcoming the planned reforms in the area of public financial management and the adoption by major ministries of the medium-term budget framework, they drew attention to the under-execution of development spending.
"The development expenditure was significantly under-executed," it said.
They expressed the hope that the adoption of a regulatory framework for the Public Procurement Act would raise the efficiency of project implementation.
The directors recommended adjusting the price of domestically produced natural gas to encourage efficient gas usage and raise government revenue and further tighten monetary policy, in the face of strong remittance inflows and higher inflation.
They urged the authorities to remove the remaining exchange restriction on the transferability of funds in nonresident taka accounts and for implementing many of the recommendations of the 2003 Financial Sector Assessment Programme (FSAP), and welcomed the authorities' request for an FSAP update.
The IMF said it supported the recent reforms to promote transparency, good governance in public administration, fair elections, and the prevention of money laundering and terrorist financing.
"These reforms, if sustained, will improve overall efficiency and boost the investment climate," it said, adding that it was looking forward to continued close cooperation and dialogue between the authorities and the staff in support of Bangladesh's reform objectives, possibly in the context of a Fund-supported programme.
The IMF also assessed that growth was expected to remain healthy, underpinned by buoyant exports, strong remittance flows, and continued reform efforts.
The PRGF agreement was signed in June 2003 between Bangladesh and the IMF. Six installments worth $467 million were disbursed by the IMF under the credit programme.