Political unrest affecting economy
After the ADB’s lower economic growth projection, the International Monetary Fund (IMF) on Sunday also said Bangladesh’s real GDP growth is expected to slow down below 6 percent in the fiscal year 2014.
“We’re still assessing…I can’t give you the exact number. But I can tell you we’re seeing signs from different indicators -- import, export, credit growth, especially private sector investment and tax collection,” visiting IMF mission chief Rodrigo Cubero told a press conference.
He said the indicators are suggesting that the economy is slowing down and this slowdown is likely to remain at least for the next six months or so. “Export and remittances have also slowed, posing downside risks to the outlook.”
Cubero also identified uncertainties regarding political environment, weaker investment demand and disruption coming from general strikes apart from labor unrest behind the slowdown that caused some supply losses.
“…unrest and political uncertainty in the run-up to elections are affecting economic activity by disrupting supply and curving investment appetite,” he added.
Earlier, the Asian Development Bank (ADB) said Bangladesh is likely to see a lower GDP growth of 5.8 percent in the fiscal year 2014 due to lower export growth and investment apart from possible political unrest ahead of the national election.
The press conference was arranged at the BB conference room to brief the media about the IMF mission’s visit and the outcome after the discussions with Finance Minister AMA Muhith, Bangladesh Bank Governor Dr Atiur Rahman, other senior officials, representatives from business and banking sectors, labour unions and development partners.
IMF Resident Representative in Dhaka Eteri Kvintradze was also present at the press conference.
The IMF mission chief, however, said the economic activity in the country would start rebounding gradually from the next fiscal year.
Responding to a question on state of state-owned commercial banks, Cubero said, “We’ve been reassured that the government would address the weaknesses in the state-owned commercial banks.”
He said there have been some non-performing loans which affected capital strength of the banks. “It’s important to address those issues.”
The IMF official laid emphasis on reducing bad loans, enhancing corporate governance and stronger credit risk management system.
On progress of the Extended Credit Facility (ECF), he said, “We’re coming here exactly the mid-point of the ECF arrangement (April 2012). So, it’s good opportunity to step back and look at what has been achieved.
Cubero said there have been a lot of achievements and progress and more importantly there have been very significant reforms on structural sides covering vast areas.
“Upon the executive board’s completion of the review, which is expected in early December, about US$ 140.5 million would be made available to Bangladesh, bringing total disbursement under the ECF arrangement to US$ 562.3 million,” he added.
Responding to a question on managing budget deficit, he said, “We’re confident that the government will remain stick to its commitment to a budget deficit target of GDP’s 4.3 percent in FY2014.”
Commenting on the overall economy, he said substantial progress has been achieved in strengthening macrocosmic policies under the IMF-supported ECF arrangement, reflecting the authorities’ continued commitment to the implementation of their reform program.
“Bangladesh is now in a better position to withstand adverse shocks with inflation pressures easing, a result to prudent monetary and fiscal policies,” he said.
Cubero also said the mission welcomes the government’s plans - in accordance with development partners, the business community, labour unions, and international buyers - to improve the working conditions and strengthen the safety standards for workers in Bangladesh.
“These are critical to ensure sustained strong and inclusive growth, particularly in the garment industry.
IMF also projects slower GDP growth
Political unrest affecting economy