## IMF Staff Completes 2017 Article IV Mission to Bangladesh

_IMF News, March 9, 2017_

## Source details

**Canonical URL:** [IMF Staff Completes 2017 Article IV Mission to Bangladesh](https://www.imf.org/en/news/articles/2017/03/09/pr-bangladesh-imf-staff-completes-2017-article-iv-mission)

## Other formats

- [Markdown version](/en/news/articles/2017/03/09/pr-bangladesh-imf-staff-completes-2017-article-iv-mission/index.md)
- [Structured JSON version](/en/news/articles/2017/03/09/pr-bangladesh-imf-staff-completes-2017-article-iv-mission/index.json)
- [Bundle manifest](/en/news/articles/2017/03/09/pr-bangladesh-imf-staff-completes-2017-article-iv-mission/bundle-manifest.json)

## Bibliographic details
- Published: March 9, 2017

---

### Mission and contacts
- Press Release No. PR17/77
- Mission dates: February 26-March 9
- Mission leader: Mr. Brian Aitken
- IMF Communications Department — PRESS OFFICER: Keiko Utsunomiya; Phone: +1 202 623-7100; Email: MEDIA@IMF.org
- Meetings held with: Finance Secretary; Bangladesh Bank Governor; Executive Chairman Bangladesh Investment Development Authority; Secretary Bank and Financial Institutions Division; Chairman National Board of Revenue; other senior officials; representatives of the business and banking sectors, labor unions, think tanks and development partners.

### Key findings and macroeconomic assessment
- Solid macroeconomic performance has been delivered by steady monetary policy management and fiscal discipline.
- Drivers of recent performance:
  - favorable external demand
  - high remittances
  - low commodity prices
- Observed outcomes:
  - strong output growth
  - falling inflation
  - moderate public debt
  - a rebuilding of external resilience
- Outlook statement by mission leader Brian Aitken:
  - “This solid macroeconomic performance is set to continue this year, with output growth projected to remain close to current levels and inflation broadly in line with Bangladesh Bank’s target.”

### Economic outlook and medium-term challenge
- Short-run projection:
  - Output growth projected to remain close to current levels.
  - Inflation projected to be broadly in line with Bangladesh Bank’s target.
- Medium-term challenge:
  - Maintaining past growth performance will become increasingly challenging over the medium term and will require upgrading macroeconomic policy-making practices and institutions to support the ambition to reach middle-income status.

### Risks and vulnerabilities
- Continued reliance on exports and remittances for growth exposes the economy to the changing external environment.
- Importance of external buffers:
  - Foreign exchange reserves buffers built over the last several years need to be maintained at levels adequate to ensure the economy’s resilience.
- Financial sector impediments:
  - Increasing reliance on high-cost National Savings Certificates (NSCs) as a financing vehicle for the government budget impedes development of a deep and liquid market for government securities and constrains long-term financial intermediation.

### Policy recommendations and reform priorities
- Preserve macroeconomic stability and contain risks:
  - Maintain fiscal discipline and steady monetary policy management.
- Maintain competitiveness and build buffers:
  - Continue to maintain adequate foreign exchange reserve buffers to guard against global uncertainties and shocks.
- Mobilize revenue and protect fiscal sustainability:
  - Modernize the tax system to boost Bangladesh’s low budget revenue and allow room for public investment and social spending consistent with growth ambitions without compromising fiscal sustainability.
  - Launch the new VAT Law in July 2017 as planned; expected benefits include:
    - central role in raising revenue
    - more transparent tax administration
    - reduced taxpayers’ compliance costs
    - serving as a key building block for a modern tax system
- Develop financial markets and intermediation for long-term investment:
  - Step up intermediation of the underutilized pool of savings over longer horizons.
  - Develop capital markets to finance long-term private investment as commercial banks’ ability to perform this function will remain limited.
  - Consider better targeted and less costly alternatives to NSCs that achieve social policy goals without distorting financial markets.
- IMF support offer:
  - The IMF stands ready to support the government’s reform efforts through policy advice and capacity building, including on monetary and fiscal policies, financial sector supervision and regulation, and macroeconomic statistics.

*IMF Press Release No. PR17/77, March 9, 2017.*

---


## References

- [Bangladesh and the IMF](http://www.imf.org/external/country/BGD/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/03/09/pr-bangladesh-imf-staff-completes-2017-article-iv-mission_