The International Monetary Fund (IMF) in its recent Spring Meetings discussed the economic situation of the Asia-Pacific region.
The multilateral lender said Bangladesh faces challenges in sustaining the effective response it unveiled in the initial phase of the pandemic last year as it grapples with a devastating second wave of the deadly pathogen.
Earlier, the IMF said despite the recent spike in Covid-19 infections, South Asia, excluding India, was recovering, led by Bangladesh.
The exports earning beyond expectations and remittances are playing a positive role in boosting the growth, it said.
The lender reviewed its GDP projection for Bangladesh upwards to 5 per cent in 2021, up from October’s projection of 4.4 per cent. The economy is likely to grow 7.5 per cent in the next year, it said.
At the virtual conference, the deputy director for the Asia and Pacific Department of the IMF said “Bangladesh is in the throes of another wave of the pandemic, and this is presenting challenges and downside risks to growth.”
The discussant talked about the types of fiscal measures the government needs to take to address the pandemic-induced economic downturn,
Ostry said that the challenge for policy was to sustain the effective response that Bangladesh made during the initial phase of the crisis.
“The government will have to continue its support to the vulnerable groups through social safety nets and its support for the agriculture sector. So, this is the challenge,” he added.
However, the government has declared 23 stimulus packages involving Tk 124,053 crore since Covid-19 hit Bangladesh on March 8 last year. The amount accounts to more than 4 per cent of the country’s gross domestic product.
Again, key contributors to the economy such as small and medium enterprises, farmers and lower-income professionals have gone through their worst-ever crisis because of the first wave of the coronavirus, the implementation rates of the stimulus packages dedicated to them are not satisfactory.
“Going forward, there is always the need to strengthen the fiscal revenue capacity of the economy to support expenditures,” Ostry said.
Working with development partners will also help fiscal cushioning, he said.