IMF upbeat about economic performance
02 February 2015, Nirapad News: The International Monetary Fund (IMF) is upbeat about the performance and prospect of Bangladesh’s economy, saying that the country’s macroeconomic situation was strong in the past two years despite global headwinds and domestic unrest.
The IMF in a statement issued Monday highly lauded the government for the strong macroeconomic performance over the past few years, including under the recently completed Extended Credit Facility arrangement.
The organisation was also confident that the economy would be stronger provided with the current political stability continues and the planed structural reforms go on.
“Provided calm prevails, prudent policies remain in place, and structural reforms are implemented as envisaged, the medium-term economic outlook should be positive and marked by continued stability and high growth”, the IMF statement, issued on conclusion of IMF Executive Board Article IV Consultation with Bangladesh, said.
It said that the real GDP growth has remained above 6.0 percent, a notable performance in the current global context, and the growth would be accelerated to 7.0 percent in near term as public investment is further ramped up and constraints on investment ease, with private investment also supporting a recovery in private sector credit. The statement noted that other major macroeconomic indicators including inflation, foreign exchange reserve and the public debt-to-GDP ratio had largely remained stable at a moderate level.
It also pointed out some areas where further attention is required to expedite economic prospect. These include weak revenue performance and low level of private investment.
On broader aspect, the IMF, however, said that “the economic outlook is broadly positive, provided the authorities continue to implement prudent policies and structural reforms to create fiscal space for development needs, strengthen the banking system, enhance resilience against shocks, including from climate change, and promote diversification and inclusion.”
It suggested mobilising domestic revenue to create fiscal space for increasing public investment in critical infrastructure and strengthening social safety nets, while keeping the debt-to-GDP ratio broadly stable.
The organisation called for timely implementation of the new VAT supported by an effective communication strategy and emphasized the importance of continued efforts to strengthen tax administration, particularly through automation, and reforms to expand income tax bases.