An International Monetary Fund (IMF) delegation, now in talks with the government, suggested downsizing the country's non-performing loans (NPLs) and to ensure good governance in the financial sector.
The multilateral funding agency also recommends trimming tax waivers and rationalizing import duty in order to navigate the ongoing global economic downturn and tackling the current budget deficit of the country, officials said Sunday.
The suggestions were put on the board in their meetings on the day with finance and revenue departments -- in a sort of prerequisites for Bangladesh availing a $4.5 billion worth of budget-support credit from the Fund.
Sources said the first set of dos was set forth in a meeting between the officials of the Financial Institution Division (FID) under the finance ministry and the IMF's negotiation team at Bangladesh Secretariat in the capital.
The IMF team also suggested ensuring independence of the central bank and carrying out necessary reforms in the financial sector, among others, as the two sides are negotiating Bangladesh's request for the $4.5-billion loan which will help replenish its dwindling foreign-currency reserves.
As of June this year, NPLs in banks stood at over Tk125,000 crore from Tk113,000 crore in March, which accounts for 8.96% of total loans disbursed.
The IMF recommended for the country's tax-collecting authority to trim tax exemptions and rationalize import duty.
In the meeting with the revenue board, the visiting mission of the multilateral development partner suggested enhancing the country's tax-GDP ratio, billed one of the lowest in Southeast Asia.
Under focus in discussions was what would be the possible benchmarks under the proposed Extended Credit Facility (ECF) or Extended Fund Facility (EFF).
As part of their exhaustive economic reappraisal mission, the IMF team met income tax, customs and VAT officials separately.
The team also held meetings with NBR chairman Abu Hena Md Rahmatul Muneem and other members of the NBR.
Official sources said the IMF wanted to know the country's near-to medium- term revenue targets and measures, status of proposed customs, income tax and existing VAT and Supplementary Duty Act 2012.
The IMF mission discussed tax policy and administrative-reform priorities and status of mid-term revenue strategies.
The team also assessed the tax officials' need for technical assistance or capacity development through thorough discussion in the meeting.
Furthermore, the fund mission discussed large taxpayers' audits and tax- collection status by the Large Taxpayers Unit (LTU), which is a brainchild of the development partner.
On customs matters, the IMF mission wanted to know details of customs trade data and changes in effective rate of collection across the fiscal year.