Bangladesh's export growth will be slower in 2012: IMF

Posted by BankInfo on Thu, Apr 26 2012 08:24 am

The International Monetary Fund predicted Bangladesh's export growth will be slower in 2012 due to a crisis in Europe and slow economic growth in the US, two main export destinations for the country.

The Washington-based lender expects the export will grow at 11.8 percent this year, down from 14.7 percent last year, said its Mission Chief David Cowen yesterday.

But it predicted the export will grow at 16.4 percent in 2013 as the world economy is now on recovering stage, he said.

On the latest $1 billion loans, the IMF official said he is hopeful Bangladesh will successfully implement the reform programme initiated under the extended credit facility.

Cowen said the government has already initiated a number of reform programmes, including new VAT law, amendments of Bank Companies Act and demutualisation of capital market.

The main objectives of the ECF programme include restoring macroeconomic stability, strengthening the external position and achieving more inclusive growth, Cowen said.

Cowen spoke at a roundtable on "IMF ECF programme - can Bangladesh deliver?" organised by the Policy Research Institute (PRI) at its office in Dhaka.

He also said Bangladesh has immense potentials to attract more foreign investment due to being situated at the strategic location in the Asia.

“The global engine of growth will be in Asia for the next few years, with Bangladesh situated at the crossroads of the world's most dynamic region.”

He said resolving infrastructure bottlenecks and improving the business environment could focus the investment spotlight on Bangladesh, including more FDI.

The approval of $1 billion loan for Bangladesh is a very small amount comparing to the country's export and remittance earnings, said ABM Azizul Islam, a former caretaker government adviser.

An aid fund of over $16 billion is in the pipeline for Bangladesh, Islam said. He stressed the need for taking steps to utilise the fund quickly to help the country bring micro-economic stability.

Subsidies are an important aspect for the country's economy, said Ahsan H Mansur, executive director of PRI. He urged the government to develop a strategy paper depicting how to handle the subsidy issues.

Mustafa K Mujeri, director general of Bangladesh Institute of Development Studies, questioned the timing of the reform programme. He said the government will expire in around two years. “So it is a bad time to initiate the reform.”

Zaidi Sattar, chairman of PRI, and M Syeduzzaman, former finance minister, also spoke.

The Daily Star/Bangladesh/ 26th April 2012

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