Bangladesh needs to increase investment to remove obstacles from the path to development and be graduated to a middle-income economy, says the International Monetary Fund (IMF).
IMF is an international organization consisting of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote employment plus sustainable economic growth, and reduce poverty around the world.
Bangladesh is undergoing a transformation from a low-income to a middle-income economy. The South Asian country continues to generate strong growth—projected at around 7 percent for 2018, the IMF officials said.
But to keep this momentum, Bangladesh will need to boost productive investment by addressing infrastructure bottlenecks and strengthening the banking sector, the IMF also stressed in its annual assessment of the economy.
The IMF mission chief for Bangladesh, Daisaku Kihara, said that tax revenues in Bangladesh are currently low, at 9 percent of GDP, while the average tax revenue to GDP ratio for non-resource rich, low-income countries is around 15 percent.
Tax policy should be overhauled and supported by continued efforts to strengthen tax administration and improve tax compliance with online registration and filing of tax returns, Kihara observed.
Talking on the ongoing Rohingya crisis, Kihara underlined that the economic impact has been limited so far though more than 700,000 refugees poured into Bangladesh.
He partly the hailed international community for attention and financial support in this regard.
However, the IMF official cautioned saying that spending pressures could increase in the future.
With the onset of monsoon, he also underlined the immediate need to mitigate the risk of flooding and landslides in the refugee camps.
Mentioning the banks as the main source of financing for companies in Bangladesh, IMF extended its call to introduce an effective reform of the banking sector.