Unrest, political uncertainty hold back economy: IMF

Unrest, political uncertainty hold back economy: IMF

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Dhaka- The ADB has made a lower economic growth projection. The
International Monetary Fund (IMF) on Sunday also said Bangladesh’s
real GDP growth is likely 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 labour 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 programme.
“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. – UNB

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