The government gave its commitment to the International Monetary Fund regarding around 50 issues to restore macroeconomic stability and good governance in the financial sector.

On Monday, the commitments were placed at a board meeting of the IMF.

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IMF sets 33 conditions for next two loan instalments

The government has introduced a roadmap aiming to bring down the overall banking sector's non-performing loan (NPL) ratio to 8 percent by 2026 while maintaining an NPL ratio of around 10 percent in state-owned commercial banks.

To bring this about effectively, it plans to strengthen the legal departments of banks so that pending cases can be settled in the debt court quickly.

"We will continue to strengthen our NPL roadmap in consultation with the IMF," the government said in a statement to the financial agency.

About bank mergers, the government said it was encouraging a market-driven process for the consolidation of weak banks and strong banks within the next few years to strengthen the financial system.

Memorandums of understanding (MoUs) for voluntary mergers have been signed between two private commercial banks and two state-run commercial banks. These mergers are likely to be completed in the next two years.

When a Prompt Corrective Action (PCA) framework enters into force in March 2025, the government will have the ability to enforce mandatory mergers if banks fail to implement their recovery plan, the statement said.

"To tackle NPLs and strengthen the merger process, we will align the NPL definition with international standards, conduct due diligence on the acquired banks, vet any merger proposal and send such proposals to the High Court for approval," it added.

"We plan to approve only those merger proposals which are commercially sound and are predicated on continued compliance with regulatory requirements; and will resolve weak banks that have no takers, with depositors protected by our insurance scheme," it said.

The government has completed Sector Strategy Papers or Sector Action Plans for seven out of 15 sectors to enable better integration of a medium-term budgetary framework and annual development programme process and strengthen project selection.

It will formulate multi-year public investment programmes for an additional five sectors by the end of this year.

It also plans to gradually clear arrears and return subsidy spending to a level consistent with its fiscal programme targets by raising electricity prices as needed.

It will further avoid any new capacity charge commitments to power producers in case of contract renewals, the government said.

To increase tax revenue, the government is stepping up efforts to strengthen the tax administration through greater digitalisation, tax net expansion, and compliance risk management.

The government has also taken steps to increase taxpayer registration by making it mandatory to present proof of tax return submission for availing 38 services, which helped increase the number of registered taxpayers by 20 lakh in FY24.

"We plan to reach 1 crore registered taxpayers by FY25," the statement added.

The government has also installed 25,741 electronic fiscal devices (EFDs) as of April 2024, which it estimates has contributed around Tk 740 crore in additional revenue in FY24.

It plans to install three lakh EFDs in total over the next five years, according to the statement.