<div style="text-align: justify; "><br></div><div style="text-align: justify;">The International Monetary Fund (IMF) has praised Bangladesh's measures, taken by the interim government, to overcome economic challenges due to the recent turbulence and major floods.</div><div style="text-align: justify;">&nbsp;</div><div style="text-align: justify;">"In response to the challenging circumstances, the authorities' efforts to initiate adjustments, including continued monetary tightening and rationalizing non-priority capital spending are commendable," IMF Mission Chief for Bangladesh Chris Papageorgiou told BSS.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The IMF mission team led by him visited Dhaka during September 24-30 to discuss recent developments and the authorities' reform priorities.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Papageorgiou said the timely formation of an interim government helped stabilize the political and security conditions, alongside a gradual return to normalcy in the economy.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"Nonetheless, economic activity has slowed markedly, while inflation remains at double-digit levels, owing to the recent turbulence and major floods. The deterioration in the balance of payments, reflecting outflows in trade credit, has put additional pressure on foreign exchange reserves," he mentioned.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">However, what the government has taken to improve the economic issues is really praising, he added.</div><div style="text-align: justify;">&nbsp;</div><div style="text-align: justify;">Responding to a question on the past government fiscal target, Papageorgiou informed that the authorities' budget has been perceived as aspirational, with optimistic tax revenue and ambitious capital spending projections.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Historically, the government had to cut back on both recurring expenses and major investments given weak revenue collection, he added.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">He mentioned that this was necessary to keep the budget deficit within their target.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"In this context and given continuously high inflation and external pressures, we support the interim government's intention to rationalize capital spending by considering execution capacity and cutting non-priority projects," he added.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Given the country's low tax revenue-to-GDP ratio compared to peers, he said the IMF supports the authorities' goal of setting ambitious revenue targets.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">However, these targets must be supported by concrete revenue-generating measures, he noted.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Papageorgiou, however, said Bangladesh's tax-to-GDP ratios has seen little improvement in recent years.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Sustainable revenue mobilization requires a multi-pronged approach, comprising both tax policy and revenue administration measures, he added.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">On the tax policy front, he said, key areas for reform include reducing widespread tax exemptions, simplifying the value-added tax (VAT) system, and broadening the tax base, as part of an overarching strategy of shifting the tax burden from trade-related taxes toward income tax and VAT.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">To improve tax administration, he said priority reforms include digitalization of tax collection processes and better tax compliance risk management.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">bnbd24/kh</div>