Bangladesh gets closer to the $1 billion credit promised by the International Monetary Fund (IMF) as the lender plans to place a proposal for the loan at its board meeting on April 11.

The credit will come in six instalments and $167 million will be available for the current fiscal year if the board approves the proposal, according to officials of the finance ministry.

The government and the IMF have already finalised a number of reforms the government will have to carry out under the scheme.

The commitments the finance minister made in his budget speech about the reforms have also been included in the list of conditions for getting the loan, the officials said.

The donor agency had earlier set some prior actions that were to be fulfilled by the government before the loan proposal is placed at the IMF board meeting for approval.

The government has already implemented the prior actions. The last of those -- approving the draft value added tax law in the cabinet -- has also been done.

Besides the prior actions, the IMF imposed 16 conditions, which include the demutualisation of Dhaka and Chittagong bourses by December.

The government will have to fulfil some other conditions such as introduction of an automated taxpayer identification number and adoption of an automatic adjustment mechanism for retail prices of petroleum to ensure full pass-through of international prices.

By June, the new VAT law has to be placed in parliament and an implementation plan and timetable for the new law has to be approved by the finance minister, according to another IMF condition.

Another law, the Banking Companies Act (amendment), has to be placed in parliament by June. The act will aim at giving Bangladesh Bank the sole legal supervisory and regulatory authority over all commercial banks, and setting proper criteria for major shareholders, board members and executive officers of the banks.

The IMF also asked the government to design a set of new regulations on loan classification and loan-loss provisioning, in line with the international best practices, by June 2014.

The IMF said a new organisational structure of the National Board of Revenue to support VAT implementation has to be approved by the finance minister by September.

The IMF also asked the central bank to issue another order by September to adjust the new amended banking law, establishing a limit on a commercial banks shareholdings in the stockmarket to 25 percent of its total regulatory capital.

The Daily Star/Bangladesh/ 28th March 2012