The International Monetary Fund (IMF) called on Bangladesh to stamp out losses at large state-owned enterprises to reduce the burden on government finances.
The losses at state-owned enterprises (SOEs), such as Bangladesh Petroleum Corp (BPC) and the Bangladesh Power Development Board, amount to about 2 percent of national income and are usually paid off by the government or with loans from state-run banks.
The losses "undermine the financial position of banks and threaten future fiscal sustainability," Thomas Rumbaugh, adviser in the Asia and Pacific department of the IMF, told reporters on Tuesday. Rumbaugh spoke after an IMF assessment this month of the Bangladesh economy. Some SOEs, especially decades-old jute mills, have been closed this year, raising criticism from the public that thousands of workers are being left jobless in what is already one of the poorest countries in the world.
The IMF says the government needs to reform the SOEs to make them more efficient and that it should close loss-making enterprises. It suggested that fuel prices needed to be raised again to reduce government subsidies that prop up BPC. Bangladesh raised fuel prices by up to 21 percent on April 1.
"We continue to believe that such price adjustment should be accompanied by targeted assistance to low income groups and other vulnerable segments of the population," Rumbaugh said.