Finance Adviser Dr Salehuddin Ahmed on Sunday (November 9) said the International Monetary Fund (IMF) is continuing its review of Bangladesh's progress under the ongoing loan programme and a final decision regarding the next installment is expected only after the formation of the next political government, reports UNB.

"The IMF has acknowledged that the government has been working to address macroeconomic challenges and implement reforms. They have some recommendations, particularly on revenue generation. We agree that tax revenue remains low, and there are structural reasons for this," Dr Ahmed said.

Talking to reporters at Bangladesh Secretariat after holding a series of meetings, the adviser said the government has already undertaken necessary reforms and is consolidating the progress before the upcoming general election, scheduled for February 2026.

He said tax compliance among citizens remains weak, while the temporary suspension of the new National Board of Revenue (NBR) for two months also had an impact on revenue collection. "We are working to resolve these issues."

According to the adviser, the IMF has also emphasised increasing expenditure in the social sectors, especially health, education and social protection. "On food security, we are performing reasonably well."

Responding to a question on whether the government expects to receive the next IMF tranche during the tenure of the interim administration, Dr Ahmed said the focus now is to maintain stability and hand over a well-structured economic reform framework to the elected government.

"We will consolidate the work done so far. Of course, we cannot complete everything. Major reforms such as tax restructuring, public sector pay commission review, and strengthening the banking sector will continue. These will be carried forward by the next government," he said.

The adviser said Bangladesh has already submitted relevant reports to the IMF, and a review mission will visit the country again early next year. "The IMF will review again around the election period and then decide on disbursement. We have no objection to this. A stable political government is needed for sustained reform."

Asked about recent remarks by the Bangladesh Bank Governor on certain policy proposals, Dr Ahmed declined to comment but said any major decision would be taken collectively by the government. "This is an internal matter of the Bangladesh government. It will go to the advisory council for consideration," he said.

The $4.7 billion IMF loan programme, approved in January 2023, aims to support Bangladesh's economic stability, strengthen fiscal reforms, and enhance resilience amid global economic pressures. Several tranches have already been disbursed, while further installments remain tied to policy performance benchmarks and structural reforms.

The IMF will delay disbursing the sixth tranche until the next national election and the new elected government assumes office.

The interim government that assumed power on August 8, 2024 three days after the Awami League regime was ousted amid a mass uprising has announced that the next general election would be held in February.

Finance ministry officials said that they were expecting the releases of the sixth and the seventh tranches in June 2026.  

On June 23, the IMF approved the release of the fourth and fifth tranches amounting to $1.3 billion, taking the overall amount of disbursement to $3.6 billion.

In June 2025, the IMF also increased the overall loan amount to $5.5 billion from $4.7 billion under the loan programme that began in 2023 under the AL regime in 2023 to meet the balance of payment shortage.  

The progarmme period has also been extended by six months to January 27, 2027 from July 2026, following requests from Dhaka.

The interim government has already reduced the balance of payment pressure.

Driven by higher remittance and export earnings, the country’s gross foreign exchange reserves increased to $32 billion on October 16, the highest in 31 months.

The latest IMF mission is also linked to the Article IV report, an annual consultation with its member countries on overall economy, on Bangladesh.

END/ZAK

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."