At the same time ration cards for kerosene or direct cash transfer to the poor will also be introduced to mitigate the impact of energy price adjustments on vulnerable groups.

"The government will make commitments to International Monetary Fund (IMF) very soon about the fuel pricing formula and a policy commitment titled Memorandum on Economic and Financial Policies has already been drafted in this regard," said a high official of the finance ministry.

He said the government's policy measures are in line with IMF's conditions for getting the sixth instalment of Poverty Reduction Growth Facility (PRGF) loan. The government is also going to pledge for another round of increase in fuel prices before introducing the automatic price adjustment mechanism next year, the official added.

IMF deferred the payment of around $80 million sixth tranche of PRGF loan, which was scheduled for July, as Bangladesh had failed to fulfil the lender's energy and revenue reform conditions.

Upon a request of the finance minister an IMF mission recently visited Bangladesh and the government told the mission that most of the reform agendas are not possible to be implemented by the present regime.

The government side told the mission that they will bring the reforms if elected for another term through the upcoming election. In a latest development, the loan proposal accompanied by the policy commitment paper is likely to be placed in the IMF executive board meeting in mid-October for approval.

Once the fuel pricing formula is introduced, prices of kerosene, diesel, petrol and octane will be determined automatically based on their prices on the international market.

Referring to last June's fuel price adjustments the policy commitment paper describes the government's measures to reduce Bangladesh Petroleum Corporation's (BPC) dependence on government-directed borrowing from nationalised commercial banks (NCBs).

It says an initial sum of Tk 600 crore was included in the current national budget that can be used to cover state owned enterprises' (SOE) losses resulting from sale of fuel below the formula prices. Additional fund will be provided from the national budget to cover the losses until energy prices are adjusted, the paper adds.

The government implemented further fuel price adjustments on June 9 by increasing prices of petrol and octane by 33 percent and 29 percent respectively, prices of diesel and kerosene were adjusted by 10 percent, it says.

However, despite further increases in international oil prices, petrol and octane prices are still near the international levels, but prices of diesel and kerosene are at about 60 percent of the international prices now.

To avert any adverse effect on the poor of further adjustments of fuel prices and introduction of the pricing formula, the government is considering expanding and strengthening two social programmes -- Food for Work Programme and Primary Education Stipend. At the same time, ration cards for kerosene or a system of direct cash transfer to the poor might also be introduced.

About IMF's condition of reforms in NCBs for getting PRGF loan, the government's policy commitment paper says a successful bidder has been selected for Rupali Bank's privatisation and a sales and purchase agreement is expected to be completed by mid-October.

On the other hand, corporatisation of Sonali, Janata and Agrani banks will be completed by the end of next February and the banks will be brought under the Bank Company Act (BCA). Managing directors of the banks will be given full management authority, which will allow them and the banks' boards to take decisions on all operational matters without prior approval from the finance ministry, the commitment paper says.

It also describes the government measures to increase revenue collection and to strengthen the National Board of Revenue (NBR).

"The government will introduce a uniform system of tax identification numbers (TIN) for the last taxpayers' unit (LTU) by the end of February," sources said referring to the policy commitment paper.

To broaden the tax base, the number of sectors eligible for tax holidays was reduced by 20 in the last two years. Taking into account a recent study on tax expenditures, exemptions and tax holidays the number of sectors eligible for tax holidays will be reduced further in FY'08 budget, the commitment paper says.

The study on tax exemptions shows that the government exempts taxes amounting to around Tk 11,000 crore every year in different ways.

The commitment paper refers to a number of government measures for increasing revenue collection and says that a minimum income tax was introduced, depreciation rules were adjusted, the assessment base for taxes on property transfers was updated, telecommunication fees were increased and the reach of value added tax (VAT) was extended to cover more retail and service sectors.

These policy measures are estimated to offset the adverse impact on revenue due to further tariff reductions and improve the revenue collection by about 0.3 percent of the GDP, the paper says adding that other ongoing efforts to improve the tax administration will boost revenue collection by another 0.2 percent of the GDP.

As the commitments are going to be made at the end of the present government's tenure this month and since a caretaker government is about to take over the administration for the next three months, the interim government will be fully empowered to implement the policies, the commitment paper adds.

But a source said, "Implementation of the commitments will be uncertain if the present government fails to come to power again."