5.5pc growth is not insignificant
The 5.5 percent growth forecast made by the International Monetary Fund for the Bangladesh economy would be decent given the pressure emanating from the external side, said a top official of the multilateral lender yesterday.
"The growth you have right now is not insignificant," Krishna Srinivasan, director of the IMF's Asia and Pacific department, told a virtual press briefing as part of the World Bank-IMF spring meeting taking place in Washington DC from April 10-16.
In its flagship World Economic Outlook, the Washington-based multilateral lender maintained that the Bangladesh economy would at best grow at 5.5 percent in 2023 -- behind only the Maldives and India in South Asia.
This comes after the WB and the Asian Development Bank earlier made growth forecasts of 5.2 percent and 5.3 percent respectively for this fiscal year, which ends on June 30.
The government though is maintaining the growth this fiscal year would be 6.5 percent.
"It [growth] has been affected by what is happening on the external demand and the risk coming from slowing markets in the US and Europe, which will bear upon on Bangladesh's exports and so on," Srinivasan said.
In the first nine months of the fiscal year, exports brought home $41.7 billion, up 8.07 percent year-on-year but missing the periodic target by $542.4 million, according to data from the Export Promotion Bureau.
"As these external headwinds ease, there should be an uptake on upside potential to growth," Srinivasan said.
"Bangladesh is one country which was severely impacted by the war in Ukraine." Krishna Srinivasan
Subsequently, the IMF forecast growth will bounce back to 6.5 percent in 2024.
"Bangladesh is one country which was severely impacted by the war in Ukraine. The terms of trade moved against Bangladesh. It led to stresses on fiscal and external accounts. In response to that, Bangladesh proactively reached out to IMF for a programme. Now, it is embarking on reforms which are consistent with what we have in the programme."
Srinivasan also touched upon the progress made in terms of reforms under the $4.7 billion loan programme.
"They are reducing untargeted fiscal subsidies by making them more targeted to people affected by high energy and electricity prices. They have increased energy and electricity prices. On the exchange rate, they are making efforts to unify the exchange rate and make it market-based," he said.
Bangladesh is poised to meet five of the six targets set by the International Monetary Fund for March as part of the $4.7 billion loan programme.
All six targets for March are not mandatory for the release of the next tranche of about $476.27 million; it will be based on how Bangladesh fares with the targets for June.
The first review of the programme will take place in the second half of 2023, when the IMF staff team will assess the programme's quantitative targets and progress of reform implementation, Rahul Anand, the IMF mission chief, told The Daily Star.
An IMF staff team will visit Bangladesh from April 25 to May 2 to discuss recent economic developments and policy implementation under the IMF-supported programme, an IMF spokesperson told The Daily Star.