In Bangladesh, the micro, small, and medium enterprises (MSME) sector faces a financing gap of $2.8 billion, according to IFC, a member of the World Bank Group. With nearly 10 million SMEs contributing to about 25 percent of the country's GDP, enhancing SME financing is key to boosting economic growth, it said on Tuesday (November 28, 2023). To explore the various aspects of financing for small and medium enterprises (SMEs) in Bangladesh, IFC, in association with Bangladesh Bank and the government of Norway, organized a conference in Dhaka. Read: BTCCI to promote Bangladesh as 'gateway to South Asia' for Thailand Experts, policymakers, and stakeholders from across the world shared their insights to help foster a resilient and inclusive environment for SME financing in the country. The event touched upon the partnership between IFC and Bangladesh Bank, results of an impact assessment study carried out on women-owned SMEs, next-generation SME financing trends, and global best practices in SME financing. It also addressed the challenges and opportunities in SME financing, identifying solutions and innovations in light of global SME finance developments. Highlighting the joint efforts of IFC and Bangladesh Bank in SME financing, the conference showcased initiatives, including developing the country’s first Credit Guarantee Scheme (CGS), reforming an SME finance policy, and strengthening the sector’s capacity. IFC’s impact study on CGS, supported by the Norwegian Embassy, revealed that the number of first-time borrowers receiving loans in cottage, micro, and small enterprises and the average ticket size of the loans for women-owned micro and small enterprises was statistically significantly higher after the launch of CGS than ever before. Women entrepreneurs who received CGS-backed loans reported that it helped their businesses survive amid crises and provided new impetus to thrive. Speaking at the conference as the chief guest, Governor of Bangladesh Bank, Abdur Rouf Talukder, said that recognizing that cottage, micro, small and medium enterprises (CMSMEs) are the backbone of society, Bangladesh Bank is spearheading several initiatives to mainstream medium and small businesses into the financial landscape. "This includes establishing a new and dedicated Credit Guarantee Department that has already piloted an online platform—the Credit Guarantee Information Management System—to help lodge applications seamlessly. We are at an important crossroads of economic development and must ensure that everyone, especially those who often get left out, can be part of the financial picture," he said. Read: BGMEA chief for stepping up economic diplomacy to boost Bangladesh-US trade Deputy Governor of Bangladesh Bank, Abu Farah Md. Nasser, said a strong SME sector is akin to a superpower for creating jobs, export earnings, and productive proficiency. "Now more than ever, we need to work together to enhance credit guarantee schemes, tap into alternative databases for SME lending, and ultimately fast-track CMSME finance in Bangladesh. We want to bridge the gap between rich and poor, make sure men and women have equal opportunities, and boost economic growth across the country," he said. Martin Holtmann, IFC Country Manager for Bangladesh, Bhutan, and Nepal, said Bangladesh is rapidly accelerating its economic development, and creating more and better jobs is a priority they share with the country as long-term partners since 1985. "IFC’s collaboration with Bangladesh Bank to develop SME solutions highlights a milestone in achieving financial inclusion and economic advancement and underscores the transformative power of partnerships, innovation, and our collective commitment to progress. We aim to increase access to financial products that are affordable, sustainable, and responsive to risks while developing institutional, operational, and policy frameworks to ensure the benefits of economic growth permeate every facet of this dynamic nation,” he said. Espen Rikter-Svendsen, Ambassador of the Royal Norwegian Embassy in Bangladesh, said, “Lack of access to finance is the biggest impediment to the growth of SMEs in Bangladesh, particularly for the women-headed SMEs." Recognizing and addressing the challenges faced by SMEs and women entrepreneurs is not just a matter of economic significance but also a step towards fostering gender equality, he said. "It is essential to create an environment that facilitates easier access to finance for SMEs, encourages more women to take on entrepreneurial roles, and provides them with the necessary financial resources to succeed," said the ambassador. Other participants included Qamar Saleem, CEO of the SME Finance Forum; Abdoulaye Seck, Country Director of the World Bank for Bangladesh and Bhutan; and managing directors and CEOs of leading banking and non-banking financial institutions in Bangladesh. The event also included technical sessions and panel discussions focusing on global best practices and a future roadmap to accelerate the SME financing market in Bangladesh. Read more: BGMEA urges Proparco to provide SMEs with the low-cost fund, grant
The government aims to collect total revenue amounting to 11.2 percent of GDP by the end of the 2025-26 fiscal, according to the Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) of the Finance Division under the Finance Ministry. It said that Bangladesh has consistently maintained an expansionary fiscal stance keeping a moderate budget deficit—usually around 5 percent of GDP—to foster economic growth, reduce poverty, and improve social outcomes. However, the tax-GDP ratio in Bangladesh is significantly lower than its peers and hence, the government has taken several initiatives to improve revenue collection. Yet, it said, the fast pace of GDP growth has made it challenging to increase the ratio. No tax fair, NBR will organise tax support service to smooth returns submission The measures that have been undertaken are expected to gradually improve revenue collection by increasing both the tax volume and the number of taxpayers. The Statement said that the foremost objectives of the public expenditure policy are to stimulate private investment through building infrastructures and improving the business climate, creating employment opportunities, supporting low-income population through social safety net programs, and reducing poverty through ensuring efficient redistribution of wealth and thus ensuring inclusive development. With the advent of the Covid-19 outbreak, the government started to focus on saving lives while keeping the living standards from falling. To do this, it mentioned, the Government emphasised on retaining jobs, providing income support, keeping supply chains active, reviving the rural economy, and ensuring food supply. Public pension is considered tax-free, notification soon: Finance Ministry For this, the government increased spending and implemented comprehensive recovery programs consisting of twenty-eight stimulus packages. The stimulus efforts worked well and as a result the economy returned to a high growth trajectory fast while other countries continued to struggle. However, the Russia-Ukraine war has again posed considerable risks and to mitigate the risks the Government has been pursuing a policy to rationalise public expenditure to stimulate economic growth by inducing domestic productivity growth. While managing the economy to maximise welfare and development, the government is expected to maintain a budget deficit of around 5 percent of GDP over the medium term. Historically, the size of public expenditure has been low relative to GDP in Bangladesh because of various limitations in the process of revenue collection and budget implementation. Land Development Tax Bill 2023 passed in JS To improve the situation, the government has undertaken certain strategies to increase public expenditure. The target of increasing public expenditure has been set to around 16.2 percent of GDP in FY 2025-26. Moreover, the government is pursuing the Public Financial Management (PFM) reforms process to achieve this target. To improve overall public service delivery, financial control of budget allocations, real-time monitoring of budget execution, and integration of recurrent and capital spending, implementation of the PFM Action Plan (2018-23) is ongoing, and revised PFM Reform Action Plan (2024-2028) has recently been formulated. Under the PFM reforms, pension automation and E-challan automation systems have been introduced with the help of iBAS++ software. This system continues to play a significant role in simplifying the budget management process. At the same time, all beneficiary programs are being brought under the Government to Person (G2P) payment system with the help of the iBAS++ software, which brings greater transparency in government expenditure management. In addition, all government allocations from government institutions as well as all semi-government, autonomous, and state-owned enterprises, are being brought under the Treasury Single Account (TSA) through the iBAS++ system in the medium term. How to Deactivate TIN in Bangladesh: A Comprehensive Guide
The government of Bangladesh is hoping to return the economy to its pre-COVID growth momentum by the end of the current fiscal (2023-24), although that presents a significant challenge in the face of a clutch of economic headwinds. The government’s vision for economic recovery is outlined in the "Medium Term Macroeconomic Policy Statement 2023-24 to 2025-26," prepared by the Macroeconomy Wing of the Finance Division, under the Finance Ministry. It maintains that with the onset of the pandemic in 2020, the economy was knocked off its fast-paced growth trajectory for large parts of the last three years. The first confirmed cases of Covid-19 in Bangladesh were reported in March 2020, less than three months after the outbreak in Wuhan. Recently published quarterly GDP data (in keeping with a condition set by the IMF) bears this out. It reveals that the economy contracted by a massive 7.86 percent in the last quarter of the 2019-20 fiscal (April to June 2020), as the virus spread throughout the globe. Read more: Financing, technology and innovation needed for just transition to greener economy: Shahriar Alam According to the quarterly data released retrospectively by the Bureau of Statistics (BBS) last month, GDP had grown by between 6.5 to 8 percent in the first three quarters of 2019-20. That reflects the extent to which the wind was knocked out of the economy by the negative growth (contraction) in the fourth quarter. The slump induced by Covid would keep economic performance depressed through the first two quarters of the next fiscal (2020-21). It wasn’t until the 3Q (January to March, 2021) that the first signs of a recovery would become visible. As the 2021-22 fiscal kicked in, Bangladesh looked ready to put Covid-19 behind it, having implemented a successful vaccination programme and lifted lockdown restrictions. The economy rallied robustly, and GDP growth touched 10 percent in the third quarter (January to March 2022). Yet even as the recovery was underway, the seeds for it to stumble were sown halfway across the globe, with Russia going to war in Ukraine in February 2022. The resulting volatility in international energy markets and supply chain disruptions would knock the momentum out again, of the country’s post-Covid recovery. Read more: World Bank forecasts Sri Lankan economy to grow by 1.7% in 2024 Although there was nothing like the contraction precipitated by Covid-19, the economy did experience a severe slowdown in the last quarter of FY22, slipping to just 2.6 percent from the previous quarter’s high of 10 percent. “Bangladesh also braced for impacts on its economy. However, actual data shows that Bangladesh did impressively even during the height of the Covid-19 outbreak and is expected to return to pre-Covid growth trajectory by the end of FY 2023-24,” the statement surmises. If everything goes according to plan and ‘assumptions hold’, it says that 8 percent GDP growth rate can be attained again in 2025-26. “Therefore, the deviation of the actual from the planned growth envisaged in the 8th FYP (Five Year Plan) remained small,” it said. Read more: Bangladesh economy hit hard by Ukraine war The Macroeconomic Policy Statement mentions capital accumulation is key for development and hence the government aims to foster private investment along with public investment towards fulfilment of its goals.. Total investment in FY 2021-22 stood at 32 percent of GDP in which the contribution of the private and the public sectors were 24.5 and 7.5 percent, respectively. To achieve the long and medium-term growth targets, the level of investment will need to be increased further. The statement points out that there is room to increase the implementation rate of public investment. If the pace of implementation of development projects can be increased, the required level of investment can be attained. “Recognising this, the government has taken steps to bring about some structural changes in both project design and implementation levels,” it says in the statement. Read more: BGMEA-Circle Economy ink MoU to accelerate garment, textile sector’s transition towards circular economy The Finance Division document said that the Russia-Ukraine war has put global energy supplies at risk. Russia is a major global supplier of energy and hence when the war broke out, commodity prices spiked fast. Bangladesh started to suffer from this like almost all other countries. By December 2022, point-to-point inflation rose to 8.7 percent and then further rose to 9.3 percent by March 2023. However, global commodity prices are already falling, and central banks have raised policy rates and because of this it is expected that inflation will come down in the coming months. The IMF has projected that the measures taken by the governments will help reduce inflation in the medium-term. The Finance Division has projected that average inflation will fall significantly to 6.0 percent in 2023-24, although there has been no indication of it through the first quarter (July to September). Read more: Bangladesh Budget 2023-24 passed in parliament In order to tame inflation and protect the incomes of the poor, the government has emphasised increasing the domestic production of essential items, while gradually tightening monetary policy. The document says that food inflation hurts the poor the most. Keeping this in mind, the government through various measures, including subsidies and incentives, encouraged the growth of agricultural output. To support the agriculture sector, disbursement of credit to the sector has been increased. By the end of February 2023, the disbursement of agricultural credit and non-farm rural credit amounted to Tk. 210.66 billion in the first 8 months of the last fiscal, which was almost 14 percent higher, year on year. Read more: Why inflation persists at a higher level in Bangladesh With the help of supportive policies of the government, the general index of industrial production (medium and large-scale manufacturing) has been on the rise, reflecting expanded industrial production. Dr Masrur Reaz, a prominent economist and public policy analyst, believes it would be very challenging to regain the pre-Covid momentum within the current fiscal, since a number of macroeconomic indicators have become unstable. Talking to UNB, he suggested the government focus on stabilising the macroeconomic situation first, which would make the economy more sustainable in the long run. Dr Reaz pointed out that high inflation, severe foreign exchange/dollar crisis preventing, among other things, opening of LCs, and the fluctuating value of domestic currency taka, should be resolved first. Read more: Businesses should get opportunities to turn around before wholesale declaration of loan defaulters: FBCCI President “To bring the economy back to its pre-Covid growth rate, these issues should be resolved first, which itself would be very challenging and difficult in a short time,” he opined. Explaining further, Dr Reaz said: “The time is to stabilise the economy rather than focus on growth. In the long run, the economy will grow through reducing the high rate of non-performing loans, keeping inflation within reasonable limits and achieving exchange rate stability.”
Asian Development Bank (ADB) has projected Bangladesh’s gross domestic product (GDP) growth to be 6.5 percent in the fiscal year 2024, compared to an estimated growth of 6 percent in fiscal 2023. The projection was made in the latest ADB report, ‘Asian Development Outlook (ADO) September 2023,’ released today. The ADB in a press release said that the growth forecast reflects an improvement in domestic demand and better export growth due to economic recovery in the Eurozone. ADB, Deutsche Bank ink risk sharing agreement to boost supply chain financing in Asia The ADB also mentioned that inflation in Bangladesh is projected to ease from 9 percent in FY2023 to 6.6 percent in FY2024. The current account deficit is expected to slightly narrow from 0.7 percent of GDP in FY2023 to 0.5 percent of GDP in FY2024 as remittance growth improves. The main risk to this growth projection is a further deterioration in export growth if global demand is weaker than expected, the press release said. Global trade finance gap expands to 2.5 trillion USD in 2022: ADB ADB Country Director Edimon Ginting said that the government is managing relatively well against the external economic uncertainties, while advancing infrastructure development and critical reforms to improve the investment climate. “These key structural reforms include to strengthen public financial management, enhance domestic resource mobilisation, improve logistics, and deepen financial sector, which are critical for private sector development, export diversification and productive job creation in the medium term,” he said. ADB to provide Bangladesh $300 million loan to boost skills of labour force He mentioned that continued high oil prices also provide a good incentive to accelerate reforms to expand domestic renewable energy supply and achieve the country’s climate change goals. The ADO September 2023 states that moderate inflation and an increase in remittances will contribute to reviving private consumption, while the completion of a number of major government infrastructure projects will boost investment. Private investment, however, may be dampened by the initial higher interest rates following the enhancement in the country’s monetary policy framework. Inflation is expected to ease in FY2024 with some fall in global non-fuel commodity prices, expected higher agricultural production, and the initial tightening of monetary policy under the new framework.
To address the present crisis on the economic front and ensure resilient, inclusive, and sustainable growth, the government of Bangladesh has adopted several reform initiatives to be implemented in the medium term (2025-26). The significant reform actions include: Revenue Mobilisation, Improved Expenditure Management, Monetary and External Sector Management, Financial Market Regulation and National Income Accounts, according to a budget document. The government has focused on reforms in tax policy and revenue administration. The plan is to mobilise additional tax revenue of about 1.7 percent of GDP by the end of FY 2025-26. Currently, the tax-to- GDP in the country is below ten percent. Read: Bangladesh’s economy has a dignified position now: PM Moreover, the government is focusing on untapped areas in the tax-revenue sector to enhance overall revenue while also emphasising non-tax revenue sources. The document states that fiscal management has become increasingly complex due to elevated and unpredictable inflation that has the potential to undermine the soundness of financial institutions and fiscal operations. The uncertainty surrounding prices, wages, and interest rates influence inflation through aggregate demand and expectations, which in turn posed challenges to fiscal planning and budgetary preparations. Read: 1st Circular Economy Summit in Dhaka on June 15 Besides rationalising the subsidies, there is a plan to bring down the cost of borrowing and bring efficiency in debt management, the document said. It said that the net National Savings Certificate (NSC) issuance is planned to be brought down to below 1⁄4 of total net domestic financing by FY26. The government plans to optimise cash management by expanding the coverage of the treasury single account (TSA) and the use of electronic funds transfer (EFT). Read: Govt to introduce circular economy to prevent plastic pollution: Minister Several reform measures have been implemented including the reduction of interest rates of saving certificates, the introduction of tiered interest rates, capping issuances, and increasing taxes on earned interest, all aimed at reducing the government's interest expenditure. In FY 2021-22, the contribution from national savings certificates accounted for 0.5 percent of GDP, a decrease from 1.2 percent in FY 2020-21. Efficient cash management is also a priority to save public funds by minimising interest expenditure. To achieve this, the government is strengthening and expanding the Treasury Single Account (TSA), which is expected to facilitate better cash management, reduce interest expenses, and improve commitment controls. Read more: Increased import costs putting pressure on economy in many ways: Minister In the Monetary and External Sector Management segment, to improve monetary operations, Bangladesh Bank will adopt an interest rate corridor system. Furthermore, to increase exchange rate flexibility, Bangladesh Bank will use market-determined exchange rates for official foreign exchange transactions on behalf of the government. To strengthen the external sector balance and improve monetary sector performance, Bangladesh Bank is going to implement several reform initiatives in the medium term. Read more: Budget not based on IMF conditions: Finance Minister There will be reform activities to unify the multiple exchange rates and bring more discipline to the foreign exchange market. Bangladesh Bank will reverse the temporary margin increases for opening letters of credit on nonessential imports. The official budget document says that “With a view to establishing a risk-based banking supervision system, Bangladesh Bank will complete the pilot risk-based supervision action plan.” Read more: CPD dismisses budget's projections on growth, inflation, revenue collection Also, it mentions that to improve governance and discipline in the financial market, the government will amend the Bank Companies Act and Finance Companies Act in line with best practices. The amended Bank Companies Act was accordingly passed last week. For better transparency, Bangladesh Bank will publish banks' distressed assets in the annual financial stability report. Bangladesh Bureau of Statistics has taken the initiative to publish quarterly GDP for having a clear view of national income accounts. Read more: Doing our best to keep economy going amid global recession: PM Hasina
Bangladesh's Finance Minister AHM Mustafa Kamal has said that the national budget for the fiscal year (FY) 2023-24 was not based on the conditions of the International Monetary Fund (IMF). "Like in different countries, the IMF has come to Bangladesh and made some recommendations to help the economy. We took their prescriptions as per our needs, but did not follow them all in preparing the budget," he said while addressing a post-budget press conference at the Bangabandhu International Conference Centre (BICC) in the city on Friday (June 2, 2023). He said the IMF is not helping the countries only by providing money, they also monitor the economy. This is good for the economy. Responding to a repeated number of questions on inflation and commodity price hike, the finance minister said the government is concerned about the rising trend in inflation. Read more: Unrealistic budget won’t help overcome economic crisis: Fakhrul "We're apprehensive about inflation, but it is not beyond our control. We cannot stop feeding the people," he said. He said the government is approaching in a flexible way to contain inflation. Through social safety-net programmes, the government has been providing food to poor people. "We're trying to identify the reasons for inflation and address those. If we need to give any concession, we will do that," he said. Agriculture Minister Abdur Razzaque, LGRD Minister Tajul Islam, Education Minister Dipu Moni, Commerce Minister Tipu Munshi, Finance Secretary Fatima Yasmin, Bangladesh Bank Governor Abdur Rouf Talukder, and National Board of Revenue (NBR) Chairman Abu Hena Rahmatul Munim were among others also addressed on the occasion. Read more: CPD dismisses budget's projections on growth, inflation, revenue collection The Finance Minister claimed that the new budget was mainly focused on benefiting the poor people. "We have expanded our tax net so that more taxes could be collected. Everybody has to pay tax," he said, adding that like other budgets in the past this was also prepared targeting both the next election and the people. "We cannot separate the people or the election from our goal of the budget," he said. Responding to another question, he said that all the projections made in the previous budgets were implemented. Kamal said Bangladesh has been well placed in remittance earnings among the countries in the region. Read more: Budget 2023-24: Govt allocates Tk88,162 crore in education sector, up 8.2% After a downward trend, remittance earning is again increasing and we can meet five months of our import bill through our reserve. He said after some measures taken by the government, the inflow of remittance will gradually go up. At the press conference, with the request of the Finance Minister, Bangladesh Governor Abdur Rouf Talukder responded to a good number of questions, specially, on inflation, remittance and banking sector. He said that Bangladesh Bank will announce its monetary policy on June 19 where it will lay out the plan on containing inflation, and increasing remittance and reserve. He claimed that though the government's loan from the banking system is increasing, it will not push up inflation as the central bank is withdrawing more money from the market through selling dollars. Read more: Budget sets 7.5 percent annual economic growth, inflation at 6 percent
The Centre for Policy Dialogue (CPD), a think tank, in its traditional post-budget review on Friday (June 2, 2023) said the proposed national budget of Bangladesh for FY 2023-24 projected ambitious targets for both GDP growth and inflation, without putting forth any realistic measures to achieve them in light of global and domestic crises. The CPD said budget focused on increasing tax-GDP ratio, but the revenue growth target is not realistic, so the volume of deficit financing will ultimately widen. CPD Executive Director Dr Fahmida Khatun led the post-budget review, held at a hotel in Gulshan, and televised live on some tv channels. She said the budget has been placed at a time when the macroeconomic stability of Bangladesh has weakened significantly. REad: Proposed budget targets are challenging: FICCI “The macroeconomic stress is visible on lowering growth of revenue mobilisation and shrinking of fiscal space of current fiscal year (FY 2022-23), soaring borrowing from banks, higher price of daily essentials and decreasing foreign exchange reserve,” she added. The private credit growth projected to 15 percent in FY 2023-24 that was 14.1 percent in 2022-23. As of April 2023, private sector credit growth was 11.3 percent, she said. Replying to a query, CPD’s distinguished fellow professor Dr Mustafizur Rahman said the revenue growth projection in 2023-24, compared with actual revenue achievement of FY2022-23, wpi;d be a massive 39 percent, which is "absolutely ambitious" - perhaps even overambitious. The budget’s growth projection occurred based on a wrong concept, so multi sectoral problems would arrive in the implementing stage of the proposed budget. Read more: Budget 2023-24: Govt allocates Tk88,162 crore in education sector, up 8.2% Mustafiz expected a monetary policy reflecting fiscal policy in light of the budget and controlling measures of higher inflation. Khondaker Golam Moazzem, research director of CPD said the budget technically avoided the capital market development policy, which is very essential for such a developing economy. “Without establishing a realistic and sustainable capital market, investment financing cannot grow, the government incentive based capital market cannot play a role in new investment in the capital market,” he added. Towfiqul Islam Khan, Senior Research Fellow in CPD said curiously, no mention was found regarding the accumulation of external payments arrears or new forex reserve. REad: Finance minister unveils the country’s largest ever budget in Parliament Details about critical reforms, including shifting towards market-based dollar exchange rate and interest rate and adoption of periodic formula-based petroleum product prices, have not been explained in the budget speech, he said. The CPD projection said Bangladesh's proposed national budget of FY 2023-24 targets 15.5 percent growth will be around 39.7 percent growth target compared to the current budget achievement and Tk1.42 lakh crore is needed to be mobilized.
Prime Minister Sheikh Hasina on Wednesday (May 31, 2023) said that the government is making every effort to keep Bangladesh's economy alive despite the global economic recession caused by the Covid-19 pandemic and the Ukraine-Russia war. The prime minister said this while responding to a tabled question of Awami League MP elected from Chattogram MA Latif for PM’s question-answer session. She said the government has been able to quickly bring the country's economy to the pre-Covid high growth trend dealing with the recession, inflation and instability in the global economy caused by the pandemic and the war. Read more: President Erdogan and PM Hasina vow to take Dhaka-Ankara ties to new height “Amid the crisis over Covid, our growth in the financial year 2019-20 was 3.45 percent which was one of the highest in the world for that period,” she claimed. She said that due to the various steps taken by the government to boost the economy, the GDP growth in the financial year 2020-21 increased by 6.94 percent. “It further increased to 7.10 percent in FY 2021-22.” Hasina also highlighted various measures taken by the government to keep the economy of the government alive. Read more: PM calls for more Swedish investment as H&M boss calls on her These included government expenditure rationalisation, social protection, subsidies in electricity, energy and agriculture sectors, export incentives, rise in remittance inflow, monetary policy etc, she said. In response to the question of Jatiya Party MP elected from Dhaka Syed Abu Hossain, the prime minister highlighted the various steps taken by the government to control the prices of daily commodities and said as a result of the government's activities, it has been possible to control the prices of essentials and the poor people are benefiting from it. In response to the question of Jatiya Party MP elected from Pirojpur Rustam Ali Farazi, the she said that it will be possible to start rail traffic on the Dhaka-Mawa-Bhanga section of the Padma Bridge Rail Link Project by September 2023 and the Jessore section from June 2024. Read more: Work together to regain lost glory in science and technology: PM Hasina to Muslim community In response to reserved seat MP Kha Mamata Lovely's question, the prime minister said that 555,134 families have been rehabilitated through the Ashrayan project.
The latest report of the Internal Monetary Fund (IMF) on Asia-Pacific region forecasts that Bangladesh's GDP growth rate in the current fiscal year will overtake that of China. The report also predicts that Bangladesh will be in second place, after Vietnam, in terms of GDP growth rate in Asia-Pacific in the next fiscal year. According to the IMF's Regional Economic Outlook for Asia and Pacific May 2023 report, Bangladesh is expected to surpass both China and India in terms of growth in 2024. In Bangladesh, GDP growth rate will slow down to 5.5 percent in 2023 because of demand-management measures, which is still higher than China's projected growth rate of 5.2 percent. Read more: Bangladesh's GDP growth expected to pick up to 6.2% in FY2024: World Bank But the economy of China is much bigger than that of Bangladesh. The IMF report suggests that the recently approved Extended Fund Facility for Bangladesh will help address economic challenges caused by Russia's war in Ukraine, and the Resilience and Sustainability Facility arrangement will expand fiscal space to finance climate investment priorities and build resilience against long-term climate risks. The report highlights the importance of international cooperation, particularly in securing financial assistance for climate change adaptation in vulnerable emerging markets in the region, including Bangladesh and the Pacific Islands. Read More: Govt struggles to lift tax-GDP ratio to double digits
Bangladesh made a rapid recovery from the Covid-19 pandemic, supported by prudent macroeconomic policies, but the economy now faces considerable challenges with global uncertainty, rising inflationary pressure, energy shortage, a balance-of-payments deficit, and a revenue shortfall, says the World Bank in its half yearly update released today (April 04, 2023). The Bangladesh Development Update April 2023, entitled “Trade Reform: An Urgent Agenda”, says that accelerating the implementation of structural reforms, including trade reforms and export diversification, will help Bangladesh navigate the current challenges and sustain growth momentum. Growth in Bangladesh is expected to accelerate over the medium term, as inflationary pressure eases, external conditions improve, and reform implementation gains momentum. Real GDP growth is expected to decelerate to 5.2 percent in FY2023 due to rising inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty. In FY2024, growth is expected to pick up to 6.2 percent. Read More: ADB lowers Bangladesh’s GDP growth forecast to 5.3% in FY 23 “Russia’s invasion of Ukraine and global uncertainty have impacted countries around the globe. Bangladesh’s post-pandemic recovery has been disrupted by elevated commodity prices, rising interest rates, and slowing global growth,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan. “The World Bank stands ready to support Bangladesh with reforms to accelerate growth and strengthen resilience.” Higher commodity prices have contributed to inflationary pressure. The balance-of-payments deficit reached $7.2 billion in the first half of FY2023, up from $5.3 billion in FY2022, creating considerable pressure on foreign exchange reserves. A multiple exchange rate system has contributed to the balance of payments pressure, disincentivizing export and remittance inflows. Moving towards a single market-based exchange rate will help restore external balance. Risks to the outlook remain elevated. Domestic banks faced challenges with tighter liquidity and increasing non-performing loans. The fiscal deficit widened in FY2023, with higher financing from domestic banks. However, the January 2023 joint World Bank-IMF Debt Sustainability Analysis (DSA) assessed that Bangladesh remained at low risk of debt distress. Read More: Expand tax net and integrate digital system to enhance tax-GDP ratio, ICAB urges NBR in budget proposal Improving trade competitiveness for export diversification will be critical to achieving Bangladesh’s aspiration of upper middle-income status by 2031. “The ready-made garments sector accounts for about 83 percent of Bangladesh’s exports. The Covid-19 pandemic underscored the risk of overreliance on a single sector,” said Bernard Haven, World Bank Senior Economist and co-author of the report. “Diversifying exports and improving competitiveness will help Bangladesh achieve upper-middle income status by 2031. For this, it will be important for Bangladesh to reduce both tariff and non-tariff barriers. A comprehensive reform program can strengthen regional integration, particularly with South Asia and Southeast Asia.” The Bangladesh Development Update is a companion piece to the South Asia Economic Focus, a twice-a-year World Bank report that examines economic developments and prospects in the South Asia region and analyzes policy challenges faced by countries. The Spring 2023 edition, titled “Expanding Opportunities: Toward Inclusive Growth”, launched on April 4, 2023, shows that South Asia’s growth prospects have weakened due to tightening financial conditions, with large downside risks in most countries given limited fiscal space and depleting reserves. It also analyzes the high level of inequality of opportunity in the region and offers recommendations to achieve more equitable and inclusive growth. Read More: Govt struggles to lift tax-GDP ratio to double digits