IMF revises down country's GDP growth

The International Monetary Fund (IMF) has revised down Bangladesh's GDP growth to 6.3 percent for the current fiscal year.

“Various economic activity indicators suggest a slower-than-expected start to the current fiscal year,” it said in a statement yesterday.

The global lender, however, added the 6-plus GDP growth was a notable performance in the current global context.

Earlier, it had forecast gross domestic product of 6.5 percent for 2015-16.

The IMF made its latest GDP forecast after its executive board concluded the 2015 Article IV consultation with Bangladesh on January 20.

In FY16, the real GDP growth is projected to be supported by higher public sector wages and public investment, said the statement.

“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.”

Growth is projected to accelerate gradually to 7 percent over the medium term, as public investment is further ramped up and constraints on investment ease, with private investment also supporting a recovery in private sector credit, IMF mentioned.

The IMF board commended the Bangladesh authorities for the strong macroeconomic performance over the past few years, including under the recently completed ECF arrangement.

“Growth has been robust, external reserves have risen, inflation has abated, the public debt-to-GDP ratio has remained stable at a moderate level, and social indicators have improved.”

Its executive directors stressed the need to improve budget formulation and execution, and to strengthen the selection of public investment projects by subjecting them to strict cost-benefit analysis, particularly projects financed by non-concessional external borrowing.

They also encouraged the authorities to improve public financial reporting and management at state-owned enterprises, and to move toward a market-based fuel price regime, said the statement.

The directors agreed that mobilising domestic revenue should be a foremost policy priority 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 board commended the authorities' efforts to promote financial inclusion.