The International Monetary Fund (IMF) has placed a strong emphasis on tackling persistent structural problems in order to strengthen Bangladesh’s economy and foster an environment that will allow for more growth.
“Policy priorities must focus on containing inflation, softening the impact of these economic disruptions on the vulnerable, and building external resilience through continued exchange rate flexibility,” IMF Director for the Asia and Pacific Department (APD) Krishna Srinivasan said in a recent interview with BSS.
While tackling the near-term challenges, he said, it is important to address long-standing structural issues to bolster growth.
“Some key priorities include tackling the long-standing challenge of raising tax revenues, which is key to increasing growth-critical infrastructure spending as well as social, developmental and climate spending to create a conducive environment for sustainable growth,” he added.
Srinivasan emphasized that in order to protect the weak and disadvantaged, Bangladesh must concentrate on upgrading its tax structure and increasing income collection.
He said that the conflict in Ukraine had complicated Bangladesh’s quick recovery from the COVID-19 pandemic and had brought forth new difficulties.
“The world has faced multiple shocks. First, we faced covid-19 pandemic. And now we are facing a war in Ukraine. The war in Ukraine has an impact on cost of living because it has increased prices of all commodities. In case of Bangladesh, the multiple shocks have had a significant impact on balance of payments, inflation, and fiscal position. And, therefore, economic activity has slowed,” he added.
He pointed out that in order to solve these issues, the Bangladeshi government has implemented a wide range of initiatives.
He continued, “However, persistent external pressure, strict demand control measures, and loss of buying power from high inflation continue to weigh on the near-term economic outlook.
He emphasized that improving governance, strengthening oversight, capital market development, and decreasing financial sector vulnerabilities will all assist raise money to achieve growth goals.
Growth potential will be increased by creating an environment that is favorable for boosting trade and foreign direct investment, investing in human capital, and enhancing governance.
He claimed that these changes, along with initiatives to increase private investment and export diversification, will help to improve Bangladesh’s economy’s resilience, support long-term, inclusive growth, and help combat climate change, a significant risk to future growth.
Despite short-term difficulties, he asserted that Bangladesh’s favorable demographics offer a considerable opportunity.
He recommended that the nation undertake measures to strengthen its economy and resume movement toward the authorities’ goal of attaining upper middle-income status in order to fully realize this potential.
