The International Monetary Fund has set a prior condition for introducing a full 15 percent statutory VAT rate on 213 products before placing the $645 million loan proposal for the fourth tranche to its executive board.
Finance adviser talks about govt’s 3 strategies to ease economic strain
The interim government may consider a dearness allowance for lower-grade government staff to provide respite from the ongoing high inflation.
Subsidies for the power sector are likely to balloon 83 percent this fiscal year as the interim government is planning to clear all arrears owed to private power producers.
As much as $670 million (around Tk 8,200 crore) from slow-moving World Bank-funded projects will be repurposed, with most of the funds going towards budget support as the government looks to navigate the narrow fiscal space amid a slowing economy.
Over half of the government’s total revenue expenditure during the first four months of the current fiscal year of 2024–25 was on interest payments alone, mainly due to increased borrowing and a rise in the interest rates.
A task force formed by the planning ministry is going to recommend the formation of an independent centre for delivering government services via social media and utilising artificial intelligence (AI).
The interim government has increased interest rates on various national savings certificates to upwards of 12 percent in an effort to make these instruments more attractive to savers and to cool inflation.
In an effort to bring normalcy back to the industries, the government will review the workers’ wage through the minimum wage board, the interim government has decided.
Bangladesh could get $3 billion in budgetary support under an Asian Development Bank (ADB) and World Bank (WB) arrangement for energy and power sector reforms and the upcoming status graduation from a least developed country (LDC) to a developing nation in 2026.
Bangladesh aims to increase its merchandise and service exports by about 12.74 percent year-on-year to $57.5 billion in the fiscal year 2024-25, according to Finance and Commerce Adviser Salehuddin Ahmed.
The interim government is planning to revise the national budget for the current fiscal year urgently and cut “wasteful expenditures” in order to alleviate the pressure on the foreign currency reserves and tame persistent inflation.
The government is seeking as much as $8 billion in budget support by December from the development partners, including the International Monetary Fund (IMF), to pay back foreign liabilities and boost foreign exchange reserves.
Although the authorities took steps to eliminate mismatches in export data in recent months, discrepancies in the data of revenue collection and expenditure among government agencies continue to persist.
As foreign aid in the pipeline reached nearly $46 billion at the start of this fiscal year, the interim government will take initiatives to utilise those funds to bolster the country’s foreign currency reserves.
Bangladesh is facing several challenges, including restoring law and order and stabilising the economy in the near term.
Interest payments against foreign loans shot up 162 percent year-on-year in the first nine months of the last fiscal year as debt servicing of loans taken for some mega projects has started.
When Sheikh Hasina returned to power in 2008, Bangladesh’s total debt was just $33.66 billion. When she fled amid an unprecedented student-led uprising on August 5, she left behind a burden of $156 billion in local and foreign loans for the country to carry.
