Rejaul Karim Byron

Prime Minister Sheikh Hasina yesterday directed the finance ministry to formulate a contractionary budget for the upcoming fiscal year to control inflation.

Bangladesh Bank’s steps to boost the country’s foreign currency reserves will not yield any positive results overnight.

Thanks to bold reform measures taken by the authorities, the IMF has drastically slashed the Net International Reserves (NIR) requirement for Bangladesh for the fourth tranche of the $4.7 billion loans.

Amid the crisis of dollars, the next Annual Development Programme will have a record Tk 1 lakh crore allocation from foreign funds.

The latest proposal was made to the IMF’s visiting mission yesterday during a joint meeting with officials of the finance division and central bank at the finance ministry in Dhaka.

Bangladesh will introduce a crawling peg system by next month to make the exchange rate more flexible and improve the foreign currency reserves, a key prescription from the International Monetary Fund.

The government has drawn up a plan to increase the price of electricity four times a year for the next three years to withdraw all subsidies in the power sector, which the IMF recommends.

Bangladesh’s macroeconomic performance has significantly improved since the country entered the IMF’s $4.7 billion loan programme in January last year, but the bleeding of foreign currency reserves continues, putting the taka under pressure, the global lender said yesterday.

Bangladesh should allow greater flexibility in its exchange rate to address issues in its external account, particularly the deficit in the financial account, said the International Monetary Fund (IMF) today

The government is likely to ask the International Monetary Fund (IMF) to revise down two key targets related to Net International Reserves (NIR) and tax revenue collection, set for June this year for the release of the fourth tranche of its $4.7 billion loan, finance ministry officials said.

The government spent Tk 246,583 crore in July-January of 2023-24 out of the total budget of Tk 761,785 crore for the entire fiscal year, figures from the finance ministry showed. The outlay under interest payments and subsidies was Tk 88,226 crore, which was 36 percent of the allocation.

The Finance Division last week disbursed Tk 1,500 crore in subsidy against the power ministry’s demand for the immediate release of Tk 3,000 crore to boost electricity supply during the summer months.

The International Monetary Fund yesterday recommended reducing government subsidies by hiking prices of power, gas and fertiliser, and spending the saved money on society safety net programmes.

During its visit to Dhaka, the International Monetary Fund’s review mission will focus on Bangladesh’s foreign exchange reserves, inflation rate, banking sector, and revenue reforms.

In the last decade, the debt-to-GDP ratio rose by 13 percentage points. The IMF forecasts that the ratio will reach 43.5 percent in 2028-29.

A top official of the ministry said the government would increase the number of beneficiaries in two major schemes – the old age allowance and the allowance for widows, deserted, or destitute women.

With inflation edging towards double digits and quarterly GDP growth nearly halving year on year, pressure on consumers is mounting and experts are pointing at even darker clouds.

Last week, the finance division issued a circular asking all ministries and divisions to send by April 29 their budget proposals for 2024-2025 and their expenditure plans for the following two financial years to help prepare the midterm budgetary framework.

The ministry of power, energy and mineral resources has sought the undisbursed subsidy at the earliest to continue with uninterrupted electricity supply during the summer months.

The government plans to design a Tk 7,96,900 crore outlay in the new budget with a focus on tight spending policy as economic headwinds are expected to persist in the next fiscal year.