Washington, DC (BBN)- The International Monetary Fund (IMF) has said that well-coordinated policy adjustments were needed to mitigate balance of payments, fiscal, and inflation pressures and contain macro-financial risks faced by Bangladesh.
“….the need for forceful policy actions on both the macroeconomic and structural fronts in light of a recent weakening in the global economic environment, rapid rise in oil imports and subsidy costs, and a pronounced increase in government borrowing from the banking system,” the IMF said in a statement on Wednesday.
An IMF mission visited Dhaka during November 30–December 13 this year to discuss a reform program with the government of Bangladesh for possible support under the IMF’s Extended Credit Facility (ECF).
The mission met with Prime Minister Sheikh Hasina, her economic and energy advisors, finance minister, finance secretary, Bangladesh Bank governor, and other senior officials, as well as private sector, development partner, and civil society representatives, the IMF said.
Discussions centered on near-term macroeconomic policy priorities and growth-critical structural reforms, which could form the basis for a program arrangement under the ECF.
“In this context, agreement was sought on a range of measures needed to reduce external and domestic imbalances, restore macroeconomic stability, and rebuild foreign reserve buffers,” it noted.
Discussions focused on policy moves to engender moderate monetary and fiscal tightening, backed by greater exchange rate and interest rate flexibility, according to the statement.
“In keeping with the government’s reform plans, commitments were also sought on more deep-seated measures needed to bring lasting adjustment, mainly to tax policy and administration, public financial management, financial sector oversight, and the trade and investment regime,” the IMF said.
A finalization of program understandings awaits further consultation among officials and with the IMF over the near term to ensure timely implementation of envisaged policy adjustments, it added.
BBN/SSR/SI-14Dec11-10:34 am (BST)