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50 tasks in 3 years to stabilise economy

Govt to bring down inflation, rebuild reserves as per IMF prescription
REJAUL KARIM BYRON
The government has pledged to take more than 50 reform measures in three years under the International Monetary Fund’s loan programme to rebuild foreign currency reserves and contain inflation.
“Our reform agenda under the IMF programme aims at restoring macroeconomic stability and undertaking structural reforms to promote inclusive and green growth,” it said.
The measures have been included in the Memorandum of Economic and Financial Policies (MEFP) that Bangladesh submitted to the Washington-based lender before the proposal for the $689 million loan was placed at the board meeting of the lender last week.
During the remaining programme period covering the current financial year of 2023-24 to 2025-26, the government plans to bring down inflation to within the range of 5 percent to 6 percent and increase the gross international reserves (GIR) to about four months of prospective imports by FY26.
Helped by continued monetary policy tightening and a neutral fiscal stance, inflation in Bangladesh is projected to moderate to 7.25 percent year-on-year in FY24.
Owing to higher commodity prices in the international market and their adjustments in the local markets as well as inadequate policy measures, inflation has still stayed above 9 percent.
The Consumer Price Index rose 9.42 percent in November. It was 9.02 percent in FY23.
Amid higher import bills against moderate remittance and export receipts, the GIR slipped to $24.3 billion in the last financial year from $36 billion in 2019-20, which could cover import bills for 3.4 months in FY23 compared to 6.1 months in FY20.
The reserves stood at $19.17 billion on Thursday.
The MEFP says it would take measures to liberalise further the exchange rate and the interest rate on bank loans. However, it did not say categorically whether the rates will be fully market-based.
According to the plan, the government will analyse existing tax subsidies, known as tax expenditures, in the areas of corporate taxes, personal income taxes, and value-added taxes, and publish the analysis as part of the FY25 budget.
“We will use the analysis to identify measures to rationalise tax expenditures, which will be adopted in our FY25 and FY26 budgets.”
The tax expenditure refers to the rebates, discounts, exemptions, reduced rates of taxation and exclusion of income from computing total taxable income.
The total amount of tax subsidies stood at Tk 1,78,241 crore in FY23, up more than 41 percent from Tk 1,25,813 crore in FY21, which accounted for 3.56 percent of the gross domestic product.
The MEFP said it will formulate a medium- and long-term revenue strategy (MLTRS) to provide a structured framework to improve revenue collection over the next four to six years.
Stakeholder consultations are expected to be completed in early 2024 and the strategy will be finalised by June next year.