Revenue sector reform, full privatisation of SCBs high on agenda
Shakhawat Hossain | Wednesday, 2 July 2008
Reform in the revenue sector and full privatisation of the state-owned commercial banks (SCBs) will get priority in the Article-IV consultation between Bangladesh and the International Monetary Fund, which begins today (Wednesday), senior government officials said.
'The consultation is likely to focus largely on the revenue sector reform, which has remained stalled for the last two years,' said a senior finance ministry official Tuesday.
An IMF mission, led by the donor agency's Asia Pacific adviser Thomas Rumbaugh, will also focus on full privatisation of the SCBs and continuation of the reforms in the loss-making state-owned enterprises (SoEs).
The power sector that has not seen any major progress in the last two fiscal years even under the present caretaker government will be other major areas of focus during the fortnight long visit of the IMF mission, said the official.
The consultation's focus largely on the revenue sector is obvious as the good revenue growth recorded in the just concluded fiscal was the outcome of the anti-corruption drive.
The National Board of Revenue (NBR) achieved the unprecedented growth of more than 23 per cent in its revenue collection in the first 11 months of the fiscal. That prompted the NBR to revise upward its annual target by Tk 21.20 billion (2120 crore).
The achievement, according to the Bangladesh Institute for Development Studies (BIDS) research director Zaid Bakth, was made thanks to the ongoing anti-corruption drive and the scope of legalising undeclared income by paying penalty taxes.
'One should not expect such a kind of growth every year without any reform,' said another finance ministry official.
The official mentioned expansion of the tax base, major changes in tax, VAT and customs regulations will be high on the agenda as the IMF will press hard for resumption of the stalled revenue reform.
He, however, said the local officials are not worried too much as the major macroeconomic indicators such as foreign exchange reserve, exports, credit growth, remittances all show a healthy trend.
Besides, the upward adjustment of energy prices including those of fuel oils and compressed natural gas (CNG) and the price adjustment of urea fertiliser have already been done.
However, the areas of concerns for the local negotiators are the risk of inflation and the low implementation rate of the Annual Development Programnme (ADP), the official mentioned.
The rate of general inflation was hovering around 10 per cent in the first eleven months of the last fiscal while the ADP implementation rate during the same period was around 60 per cent, which is contrary to employment generation.
The Article IV consultation, which is mandatory for every member countries once a year, was held last in Bangladesh in April, 2007.
But this year, the consultation has been deferred by two months at the recommendation of the local side, said an IMF official.
'The consultation is likely to focus largely on the revenue sector reform, which has remained stalled for the last two years,' said a senior finance ministry official Tuesday.
An IMF mission, led by the donor agency's Asia Pacific adviser Thomas Rumbaugh, will also focus on full privatisation of the SCBs and continuation of the reforms in the loss-making state-owned enterprises (SoEs).
The power sector that has not seen any major progress in the last two fiscal years even under the present caretaker government will be other major areas of focus during the fortnight long visit of the IMF mission, said the official.
The consultation's focus largely on the revenue sector is obvious as the good revenue growth recorded in the just concluded fiscal was the outcome of the anti-corruption drive.
The National Board of Revenue (NBR) achieved the unprecedented growth of more than 23 per cent in its revenue collection in the first 11 months of the fiscal. That prompted the NBR to revise upward its annual target by Tk 21.20 billion (2120 crore).
The achievement, according to the Bangladesh Institute for Development Studies (BIDS) research director Zaid Bakth, was made thanks to the ongoing anti-corruption drive and the scope of legalising undeclared income by paying penalty taxes.
'One should not expect such a kind of growth every year without any reform,' said another finance ministry official.
The official mentioned expansion of the tax base, major changes in tax, VAT and customs regulations will be high on the agenda as the IMF will press hard for resumption of the stalled revenue reform.
He, however, said the local officials are not worried too much as the major macroeconomic indicators such as foreign exchange reserve, exports, credit growth, remittances all show a healthy trend.
Besides, the upward adjustment of energy prices including those of fuel oils and compressed natural gas (CNG) and the price adjustment of urea fertiliser have already been done.
However, the areas of concerns for the local negotiators are the risk of inflation and the low implementation rate of the Annual Development Programnme (ADP), the official mentioned.
The rate of general inflation was hovering around 10 per cent in the first eleven months of the last fiscal while the ADP implementation rate during the same period was around 60 per cent, which is contrary to employment generation.
The Article IV consultation, which is mandatory for every member countries once a year, was held last in Bangladesh in April, 2007.
But this year, the consultation has been deferred by two months at the recommendation of the local side, said an IMF official.