The IMF is set to quit the ECF programme soon as the government has failed to commit implementation of roadmap for the new value-added tax act, suggesting a bitter relation between the government and the lending agency. The pre-mature ending of the reform programme that was undertaken about three years back to bring about regulatory changes in the broad economic matters would deprive the country of nearly $300 million, a senior finance ministry official said.
The disbursement of the sixth instalment of the $1 billion ECF fund was scheduled in last November, while the final one in February.
‘You can say the ECF has ended without any farewell, as the government is still rigid on not making any timeframe to implement the new VAT act as asked by the IMF,’ a senior official at the finance ministry told New Age.
He said the International Monetary Fund had recently informed the finance ministry of their stance over making no review on the country’s macro-economy and implementation status of the triggers including
the implementation of new VAT act tagged with the ECF programme, if the government did not announce roadmap.
Officials concerned said any bitter ending of a programme with the multilateral lending agency would make the country’s further access to the western capitals difficult.
The IMF board in April 2012 approved around $1 billion for Bangladesh of which $704 million has already been released in five instalments. Before releasing each instalment, the IMF reviews progress of the reforms it suggests.
The international lending agency under the ECF asked the finance ministry to promulgate the revised launch date of July, 2016 for the new VAT act by issuing a gazette notification, publishing the combined tender for the procurement of the software and hardware to enable introduction of the new VAT mechanism and a formal approval by finance minister AMA Muhith by last December.
Officials concerned said a recent communication made from the headquarters of the IMF said they were not interested to field their mission until the government changed its mind on VAT policy.
It is learnt that finance minister AMA Muhith, though personally supportive of the introduction of new VAT act, remains firm not to announce any roadmap towards the VAT act implementation as a number of his cabinet colleagues oppose the new consumer tax.
The new VAT and SD law (VAT law), was passed by parliament on November 2012.
Under the new VAT law, the existing package VAT and truncated system of VAT and tariff value system to determine the VAT amount would no longer exist and be replaced by uniform 15 per cent VAT.
However, small and medium enterprises with Tk 24 lakh or below annual turnover will remain out of the purview of the new VAT system.
-With New Age input
