Bangladesh needs to accelerate its ambitious reform agenda for sustainable growth: IMF

While confronting challenges resulting from the global headwinds, the authorities need to accelerate their ambitious reform agenda to achieve a more resilient, inclusive, and sustainable growth, says the International Monetary Fund regarding Bangladesh.

The IMF approved a $4.7 billion loan for Bangladesh on 30 January. Bangladesh is the first Asian country to access the RSF ($1.4 billion of the $4.7 billion).

"Substantial investment in human capital and infrastructure will be needed to achieve Bangladesh's aspiration to reach upper-middle income status by 2031 and meet the Sustainable and Development Goals (SDGs)," says an IMF press release.

The authorities recognise these challenges and also the need to tackle climate change issues, which expose the economy to large risks that could threaten macroeconomic stability.

Reforms will focus on creating fiscal space to enable greater social and developmental spending; strengthening the financial sector; modernizing policy frameworks; and building climate resilience.

The ECF/EFF arrangement will protect macroeconomic stability and rebuild buffers, while helping to advance the authorities' reform agenda. The implementation of the domestic revenue mobilisation strategy that relies on both tax policy and revenue administration reforms will allow increasing social, development and climate spending sustainably.

The IMF says, "Fiscal reforms to strengthen the management of public finance, investment, and debt will improve spending efficiency, governance, and transparency. Reducing financial sector vulnerabilities, strengthening oversight, enhancing governance and the regulatory framework, and developing capital markets will help mobilize financing to support growth objectives.

Structural reforms to create conducive environment to expand trade and foreign direct investment, deepening the financial sector, developing human capital, and improving governance to enhance the business climate are needed to lift growth potential.

"Access to RSF will provide financing to support Bangladesh's climate change adaptation and mitigation efforts. The RSF reforms will complement reforms under the ECF/EFF by improving climate investment potential, strengthening institutions and enhancing climate-spending efficiency to build resilience and catalyze additional official and private finance," says the IMF release.