Statement by IMF Deputy Managing Director Naoyuki Shinohara at the Conclusion of His Visit to BangladeshPress Release No. 14/325
July 2, 2014
Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement in Dhaka at the conclusion of his two-day visit to Bangladesh:
“I would like to thank Her Excellency Prime Minister Sheikh Hasina and Honorable Minister of Finance Abul Maal Abdul Muhith for their warm hospitality and for very fruitful discussions. I also had the privilege to visit the National Parliament and to meet with members of the Parliament’s Standing Committee on the Ministry of Finance, as well as with senior officials of the Ministry of Finance and Bangladesh Bank (BB).
“During my visit, I was impressed by the authorities’ determination to transform Bangladesh into a middle-income country with sustainable and equitable opportunities for all. Bangladesh has had a remarkable economic and social performance over the past two decades, with significant poverty reduction and low, stable levels of inequality. It has a vibrant economy and strong potential to achieve higher and sustained inclusive growth. Realizing this potential will require safeguarding macroeconomic stability; further strengthening the financial sector, business climate and labor conditions; and building fiscal space to increase the level and quality of spending on health, education, and critical infrastructure.
“The authorities have made substantial progress in strengthening macroeconomic conditions supported by the IMF's Extended Credit Facility (ECF) arrangement, approved in April 2012. The country now has a stronger external and domestic position, with international reserves more than twice the low levels of late 2011, a prudent overall fiscal stance, and lower underlying inflation. Significant progress has also been made with structural reforms. Following passage in November 2012 of the new value added tax (VAT) law, preparations are underway for launching the VAT in July 2015. Amendments to the Banking Companies Act, passed in July 2013, have significantly strengthened banking system governance, enhancing the supervisory powers of BB to safeguard financial stability. Progress toward achieving the Millennium Development Goals is also remarkable, particularly on increasing access to primary education and eliminating gender disparity in primary and secondary schools.
“To safeguard these achievements and ensure sustained high and inclusive growth going forward, the authorities recognize that continued efforts are needed on several fronts. Tax collections need to be stepped up to create more space for priority social and development spending. Further bringing down the cost of inefficient and regressive energy subsidies will also create room to boost spending on well-targeted social safety nets to protect the poor, allowing the country to build on its impressive gains on social welfare indicators over the past two decades. The authorities highlighted their intention to continue to strengthen public debt management, focusing external borrowing on projects with high social returns. They also concurred with the importance of strengthening the financial position of the state-owned commercial banks through enhanced supervision and corporate governance, complemented with gradual recapitalization as required. The authorities are also taking important steps to improve the business climate as well as labor and safety conditions for workers.
“The IMF will continue to work closely with the government of Bangladesh to support the policies and reforms oriented toward safeguarding macroeconomic and financial stability and achieving higher growth and further poverty reduction. Once again, I would like to thank the authorities and the people of Bangladesh for their warm hospitality, and I look forward to continuing our fruitful cooperation.”