IMF sees Bangladesh's growth rate, inflation unchanged in 2015-16

The IMF has forecast that Bangladesh’s economy will grow in the current 2015-16 fiscal year like the previous years and the inflation will remain same as well.

It organised a media conference at the finance ministry on Tuesday after a visit of its team led by Rodrigo Cubero to hold discussions on the 2015 Article IV Consultation.
 
Cubero said, "In FY16, inflation and real GDP growth rates are expected to be similar to that of FY15, with growth spurred by higher public sector wages, public investment and remittances."
 
Bangladesh's GDP growth was 6.5 percent and inflation 7 percent in the 2014-15 fiscal.
 
Cubero said the rates were 'favourable', but Bangladesh had 'important challenges' to face.
 
"The tax revenue-to-GDP ratio is one of the lowest in the world. Public spending on infrastructure and social safety nets is also low compared with countries at similar levels of development," he said.
 
"Private investment has been constrained by infrastructure bottlenecks, particularly in energy and transport, and by a high regulatory burden," he added. 
The IMF official said, "The banking system is burdened by a high level of nonperforming loans and weak corporate governance (particularly in state-owned banks), which place upward pressure on interest rates and hamper credit flows to the economy.
 

"And Bangladesh remains one of the world’s most vulnerable countries to natural disasters and climate change," he added.

Cubero emphasised increased public spending on cost-effective projects in power and transport infrastructure and climate change adaptation in order to maintain the GDP growth.

He also said 'significant improvement' in tax revenues was also needed.

The IMF executive praised Bangladesh’ progress in implementing the new VAT Act, scheduled to be launched in July next year. 

"In addition to mobilising additional resources, the new VAT is designed to protect the poor and small businesses; to make tax administration more transparent; and to reduce taxpayers’ compliance costs," he said.

The IMF team arrived in Dhaka on Nov 4.