Staff Reporter :The International Monetary Fund (IMF) has projected a 6.25 per cent GDP growth for Bangladesh in the current fiscal (2014-15) compared with 6.1 per cent in the previous fiscal year. IMF, the Washington-based multilateral donor, predicted it after its fifth review under the Extended Credit Facility (ECF) arrangement with Bangladesh. “With a calmer political environment, economic activity is gaining momentum, and real GDP growth is expected at about 6.25 per cent in next fiscal year supported by strong domestic demand,” the IMF said.Posting a statement in its official website on September 30, it also said that the Bangladesh authorities have made significant progress in consolidating macro-economic stability under the ECF-supported programme. “Despite moderation in exports, foreign exchange reserves have continued to increase and have reached adequate levels, inflation has declined, the fiscal deficit is contained and public debt is on a downward path,” it noted.It also said there has also been progress on structural reforms. However, the introduction of a new value added tax (VAT), a key government reform to boost fiscal space for development spending, is facing delays. “To ensure sustained rapid growth and poverty reduction in the medium term, it is necessary to preserve macro-economic stability and create fiscal space for critical infrastructure investment and well-targeted social spending,” it added.According to the IMF statement, the persistent revenue shortfalls relative to budget expectations reinforce the importance of pressing ahead with tax reforms. Implementing the new VAT remains the foremost priority, as it has the potential to mobilize considerable additional resources, reduce compliance costs, and boost growth. “This should be complemented by reforms to strengthen revenue administration and automate data management and reporting procedures,” it added.It further said that the authorities had made good progress in improving working and safety conditions in the garment industry. Steps have also been taken to gradually liberalize foreign exchange regulations, helping to boost the investment climate. “Continued progress on these fronts should contribute to promoting sustained high and inclusive growth,” the IMF said.A mission of IMF led by Rodrigo Cubero visited Dhaka from September 17 to 30 to conduct discussions on the fifth review under a three-year ECF arrangement. The ECF was approved on April 11, 2012 for a total amount of about $954 million.The mission met with the Minister of Finance, Minister of Commerce, Economic Adviser to the Prime Minister, Finance Secretary, Bangladesh Bank Governor, and other senior officials, development partners, and the private sector. “The IMF team is appreciative of the constructive and open dialogue and thanks the authorities for their warm hospitality during the visit,” according to the statement. “The mission welcomes the authorities’ efforts to strengthen public debt management by focusing external borrowing on projects with high social returns; to improve public financial management, including by formalizing monthly treasury cash flow forecasts; and to strengthen financial reporting by state-owned enterprises. The mission also looks forward to further decisive steps to improve the financial position of the state-owned commercial banks through enhanced supervision and corporate governance, complemented with gradual recapitalization as required.Earlier, the Asian Development Bank (ADB) made the forecast that Bangladesh economy would grow at 6.4 per cent in the fiscal 2014-15.
