The International Monetary Fund (IMF) has delayed the disbursement of the fourth tranche of its loan program, amounting to $645 million, by more than a month. The proposal for the release, initially scheduled for February 5, will now be presented to the IMF’s Executive Board on March 12. If approved, the funds may be disbursed shortly after. Under the ongoing loan program, Bangladesh must fulfill certain conditions to receive each tranche. For the fourth installment, all conditions set for June, except for tax collection, have been met. The IMF’s 13-member delegation visited Dhaka in December to review the progress of these conditions. A senior official from the Ministry of Finance mentioned that increasing tax revenue was a key focus of the discussions. Despite efforts to meet revenue targets, the government has struggled with tax collection in previous tranches as well.

The IMF delegation pressured the government to reduce tax exemptions and increase the tax-to-GDP ratio by 0.2% annually, a condition that the government negotiated. As part of measures to increase revenue during high inflation, the government raised VAT and supplementary duties on several goods and services. However, this move faced criticism from various sectors. Consequently, the government reduced the taxes on some items like medicines, mobile services, restaurants, clothing, and sweets. This reduction raised concerns about the government’s ability to meet its revenue targets.

IMF officials held meetings with representatives from the Ministry of Finance, the National Board of Revenue (NBR), and Bangladesh Bank regarding the issue. During these meetings, the government promised to adopt new strategies for increasing tax collection and improving revenue generation. The delay in the fourth tranche’s disbursement is mainly attributed to negotiations over meeting revenue targets. Earlier, on December 19, IMF Mission Chief Chris Papageorgiou had confirmed the agreement with the Bangladesh government on the fourth tranche and also stated that the loan amount would be increased to $5.3 billion under the current program.