Dhaka, Bangladesh (BBN)– The International Monetary Fund (IMF) has projected Bangladesh’s real gross domestic product (GDP) growth to increase to 6.25 per cent in the fiscal year (FY) 2014-15
“Looking ahead, with greater calm after the elections, domestic demand is expected to recover, and real GDP growth is projected to increase to 6¼ percent in Fiscal Year (FY)15 (July 2014 – June 2015),” the IMF said in a statement on Thursday.
It also said the main risk for growth would be a resurgence of unrest. Inflation is expected to decline in FY15 on continued policy restraint, though higher wages and adjustments in administered prices pose upside risks. “The current account of the balance of payments is projected at a surplus of 1.3 percent of GDP in FY14, and is expected to move into a moderate deficit in FY15.”
Macroeconomic policies under the authorities’ programme are set to remain focused on safeguarding stability and building policy buffers. With inflation risks tilted to the upside in the near term, monetary policy should remain prudent. Fiscal policy will be anchored on a continued gradual reduction of the public debt-to-GDP ratio, while allowing for increased public investment and social spending, according to the IMF.
“Continued fiscal prudence will also help provide greater room for credit growth to finance a recovery in private investment,” it noted.
Bangladesh has one of the lowest tax-to-GDP ratios in the world, and it is critical to strengthen revenues so as to broaden fiscal space for priority development spending, while resisting pressures to provide further tax benefits. “Implementation of the new VAT remains the foremost priority, complemented by reforms to strengthen revenue administration.”
The programme also embodies reforms to improve public financial management, including by formalizing monthly treasury cash flow forecasts, strengthening financial reporting by state-owned enterprises, and tightening debt management procedures.
BBN/SSR/AD-30May14-3:28 pm (BST)
