B Mirror Report: Finance officials are scheduled to seek guidance from the Prime Minister on the extent to which Bangladesh can meet International Monetary Fund (IMF) conditions in order to secure hard-term budget support under the ongoing lending programme.
Finance Minister Amir Khosru Mahmud Chowdhury is expected to lead the delegation in today’s consultation meeting with Prime Minister Tarique Rahman, according to officials. They noted that IMF loan conditions have become increasingly difficult to navigate during the final phase of negotiations.
A senior government official who participated in last week’s IMF Spring Meetings in Washington said the decision-making process has grown more complicated as the current macroeconomic environment leaves limited scope for full compliance with the fund’s requirements.
He said the issue has now shifted beyond economics into the political domain whether the government is willing to accept the IMF’s reform conditions in full or pursue partial compliance.
Among the key conditions tied to the release of the next two tranches in June 2026 are reduction of subsidies, raising the tax-to-GDP ratio to 9.2 per cent, and transitioning to a market-based exchange rate.
Officials said the government is unlikely to adopt aggressive fiscal tightening in the upcoming budget, citing external pressures including the ongoing Middle East conflict, weak private investment, rising fuel costs, persistent inflation, and slowing export performance.
According to sources, IMF negotiators have taken a stricter stance this time, particularly on the removal of tax exemptions and the introduction of a uniform VAT rate measures that officials believe would be difficult to implement under present conditions.
At the same time, IMF representatives have urged early-stage reforms to reduce future adjustment burdens.
National Board of Revenue (NBR) officials estimate that achieving a 9.2 per cent tax-to-GDP ratio by FY2026-27 would require an additional Tk 2 trillion in revenue within a year. The government has already set a revised revenue target of Tk 6.04 trillion for the NBR, nearly Tk 1 trillion higher than the current fiscal year.
However, revenue officials fear a shortfall of around Tk 1 trillion in the ongoing fiscal year, with collections reaching Tk 2.51 trillion up to February about half of the revised target of Tk 5.03 trillion.
An NBR senior official said the required revenue growth of nearly 50 per cent is not realistic under current economic conditions. He also questioned the feasibility of withdrawing tax exemptions and subsidies, arguing that such moves could further strain an already fragile economy.
“The economy cannot absorb abrupt withdrawal of fiscal incentives at this stage,” he said, adding that revenue mobilisation cannot be significantly increased overnight through enforcement measures alone.
Government insiders said the IMF’s firm position on several structural reforms has made internal decision-making more difficult, as these issues cannot be resolved solely at the ministry level. External financing from multilateral lenders also depends heavily on IMF assessments.
Following the Washington meetings, the NBR chairman held an emergency review meeting on Sunday to assess possible policy responses and compliance scenarios.
Meanwhile, economic experts have urged caution. Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said the government should develop a realistic roadmap for IMF compliance.
She noted that while IMF financing is important, not all conditions can be implemented within a short timeframe, particularly the withdrawal of tax exemptions.
“The economy is not yet in a position to absorb such pressure,” she said, adding that several sectors still require fiscal support and targeted tax incentives for growth and stability.
