Bangladesh: Selected Issues
IMF Staff Country Reports, September 18, 2019
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- Bangladesh: Selected Issues
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Bibliographic details
- Published: September 18, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513514314.002
Summary of key findings
- The paper summarizes achievements of the authorities to date and describes several options to support their ongoing efforts.
- The economic impact of climate change on Bangladesh is likely to become more pronounced.
- Experts from the Intergovernmental Panel on Climate Change predict that a rise in sea levels and coastal erosion could lead to a loss of 17 percent of land surface and 30 percent of food production by 2050.
- Responding effectively to the impact of climate change depends on designing an appropriate set of fiscal policies that can mobilize both public and private sources of finance for mitigation and adaptation activities.
- A second priority is to raise domestic revenue from its current low base.
Climate change impacts and projections
- Projected impacts by 2050:
- Loss of 17 percent of land surface.
- Loss of 30 percent of food production.
- Increased frequency and severity of coastal erosion and sea level rise are driving these projected losses.
- The outlook is a source of concern given the scale of these projected losses to land and food production.
Fiscal policy options and roles
- Fiscal policies can play a key role in mobilizing both public and private sources of finance for mitigation and adaptation activities.
- Policy instruments discussed include revenue-raising measures that can be directed toward climate mitigation and adaptation.
Carbon tax: rationale and trade-offs
- Introduction of a carbon tax is presented as part of raising domestic revenue from a low base.
- Benefits of a carbon tax noted:
- Helps establish a predictable price for carbon emissions.
- Provides clear incentives to promote investments in emissions-saving technologies.
- Generates revenue that may over time be used to reduce other distorting taxes on labor and capital.
- Concerns and counterarguments:
- Opponents argue that carbon taxes can harm economic activity and slow job creation.
- The paper contrasts these concerns with the potential revenue and incentive benefits.
Policy priorities and recommendations
- Prioritize design of an appropriate set of fiscal policies to address climate change impacts and to mobilize finance for mitigation and adaptation.
- Raise domestic revenue from its current low base, with the carbon tax identified as one option that also supports climate policy objectives.
- Consider using carbon tax revenue to reduce distortions from other taxes on labor and capital to mitigate potential adverse effects on economic activity and employment.
Source: Bangladesh: Selected Issues (September 18, 2019), IMF Staff Country Reports No. 2019/300.
Content in this bundle
- Bangladesh: Selected Issues; IMF Country Report No. 19/300; August 5, 2019