The economy of Bangladesh should grow up to 6 percent in the current year as agriculture, exports and domestic revenue collection were showing positive signs, the International Monetary Fund (IMF) said on Sunday.
"With exports recovering and a strong boro (rice) crop being harvested, the GDP (gross domestic product) growth of 5.5 to 6 percent appears possible for the current 2007-08 (July-June) fiscal year," Thomas Rumbaugh, adviser in the IMF's Asia and Pacific department, said.
Earlier the IMF had forecast the economy would grow 5 percent against the government's target of 7 percent. Central bank governor Salehuddin Ahmed told reporters that what the IMF said was of "no matter to us", though he added: "Now the IMF agreed with us about the growth of the economy."
Rumbaugh told a news conference after a week-long visit to Bangladesh that the IMF had been concerned growth would slow due to repeated natural calamities in 2007 which seriously affected agriculture and rural infrastructure.
Rumbaugh led an IMF team to Dhaka from April 22 to 27 to assess recent economic developments and the outlook for the national budget in the fiscal year to the end of June 2009.
The IMF team met interim government chief Fakhruddin Ahmed, a former governor of the central bank, finance adviser Mirza Azizul Islam and central bank governor Salehuddin.
MULTIPLE SHOCKS:
"The economy has withstood multiple shocks in the current fiscal year... but recent improvements in export performance and agricultural production are contributing to a rebound," Rumbaugh said in a written statement Bangladesh this year expectsvest 17.5 million tonnes of boro rice, 17 percent higher than last year.
In July-February, the first eight months of 2007/08, export earnings grew 11.3 percent to $8.93 billion, though this was short of a targeted $9.32 billion, according to official figures. But the IMF also mentioned internal and external challenges for the economy.
"The abnormal and intolerable price hike of essentials in Bangladesh and sharp rise of import costs of fuel oil are major challenges for the country," it said.
"Inflation, driven thus far by food prices, has remained around 10 percent and will continue to be a policy challenge for the government going forward."
The IMF, which provided $218 million to Bangladesh under the emergency natural disaster assistance plan, suggested the country should maintain about three months of import coverage.
It said improved revenue performance provided needed fiscal support to address subsidies and safety net concerns. "This increased spending to help protect vulnerable groups from the impact of high commodity prices is appropriate. To finance this spending, however, continued improvements in revenue and reducing substantial losses of state-run organisations through price adjustments will be necessary." Under a three-year Poverty Reduction and Growth Facility arrangement which expired in June 2007, Bangladesh received about $482 million from the IMF.
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