IMF sees growth at 6.0pc

The International Monetary Fund (IMF) said on Tuesday the fresh flare-up of unrest in Bangladesh in early January had been taking its toll on the country's economy.
In view of the political turmoil continuing since January 06 last, the Washington-based IMF expects the real GDP (gross domestic product) to grow by about 6.0 per cent in the current fiscal year (FY) 2014-2015.
The government targeted 7.3 per cent economic growth in its current budget. Finance Minister AMA Muhith already hinted that the economic growth might shrink slightly under the impact of the political turmoil that still continued to linger on.
IMF mission chief Rodrigo Cubero said the economy might grow by 6.5 per cent in the next fiscal year 2016, if the calm is restored and uncertainty abates.
The mission chief made the observations on conclusion of their two-week visit here since February 25.
The mission chief also said inflation eased against lower food prices, but faced upside risks from the unrest-related disruption in supplies.
Mr. Cubero was briefing the media after the IMF mission's fifth and sixth reviews under the Extended Credit Facility (ECF).
Replying to a volley of questions from the media, the mission chief said the unrest had many negative impacts on the economy, especially the service sector including transport.
Replying to another question on the high domestic fuel prices despite fall in the international market, the mission chief said they had discussed it with the government.
"They have informed us that they have been monitoring the fuel prices in the international market," he told the reporters.
Mr. Cubero said the external current account was expected to shift to a deficit in the wake of the strong import growth and moderate exports.
Nevertheless, he said, foreign exchange reserves continued to increase.
He said for achieving that end, the country would require much higher fiscal revenue.
"Bangladesh has one of the lowest tax-to-GDP ratios in the world. The government's main policy reform in this regard is the implementation of the new VAT Act, passed by the Parliament in November 2012".
He said the new VAT Act would lead to a significant rise in revenue, while reducing taxpayer harassment and compliance costs for businesses, shielding small businesses through a minimum threshold, and protecting poor households through exemption of basic consumption items.
The mission welcomed the government's strong commitment to launching the new VAT Act in July, 2016.
"This effort should be complemented by further progress in modernising and automating tax revenue administration and by enhancing taxpayer education," the mission chief said
    jasimharoon@yahoo.com