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$ 75m IDA credit may be stalled
The new government's opposition to some of the World Bank's reform suggestions, accepted by the previous government, may stall approval of a proposed 75 million US Dollar IDA credit to Bangladesh, reports UNB.
The suggestions were vehemently objected by the new administration when a World Bank appraisal mission on Industrial Sector Credit (ISC-li) was visiting the capital early this month, official sources said.
The World Bank tagged a long list of reform suggestions with the ISC-11, some of which fueled widespread controversy within the country. The private sector tn particular has recently become vocal against the suggestions.
The government objected to the Bank recommendation for elimination of pass book system which allows the industrial importers to import at a lower margin and avoid advance tax.
The World Bank, however.
>ws been pressing elimination of the system on the ground that it is a discriminatory regulation which also causes procedural problems.
But. sources said, tn the wrap-up meeting with the WB mission on April 4. Industries Secretary Shafiul Alam strongly opposed the suggestion saying that the abolition would compel small importers to depend on large import houses.
The government side also argued that Bangladesh can hardly afford such a suggestion of free Import tn view of its scarce foreign exchange.
Officials also vigorously opposed the World Bank proposal for withdrawal of tariff concession for machinery import for the least developed areas.
They argued with the WB
appraisal mission that the suggestion is contrary to the constitutional commitment of balanced development in the country and it would cause ae-rious political problem for the new government
The WB recommendation of withdrawal of development surcharge and licence fees on Import and substantiate the revenue loss by eorresponding Taka devaluation was also opposed.
The National Board of Revenue (NBR) argued with the WB mission that the abolition of development surcharge would cause a huge revenue shortfall.
The two sides also failed to reach a consensus on the launching schedule of the controversial Pre-Shipment Inspection system.
Sources said the WB mission cautioned the government that any cut In the reform package would cause the Bank of reconsider the entire credit package.