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IMF stresses financial reforms alongside tight monetary policy to control inflation

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IMF stresses financial reforms alongside tight monetary policy to control inflation
The International Monetary Fund (IMF) has advised Bangladesh to continue a tight monetary policy to control inflation. However, the institution warned that inflation cannot be reduced and economic stability restored by tight monetary policy alone. For this, strengthening the capacity of the financial sector, increasing revenue collection, and effective reforms in overall economic management are urgent.

Speaking at a press conference on the sidelines of the annual meetings of the World Bank and IMF in Bangkok, Thailand, Sonali Jain-Chandra, Deputy Director of the IMF's Asia and Pacific Department, said these things.

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According to IMF data, last September, inflation in Bangladesh rose to 8 percent. In coping with this pressure that has continued for about three and a half years, the country currently faces major challenges in all three areas—revenue management, the financial sector, and inflation. The institution stressed adopting a credible reform strategy, especially to overcome weaknesses in the financial sector. Besides, the country's revenue-to-GDP ratio has steadily declined and now stands at about 7 percent, one of the lowest in the world. It urged taking coordinated measures to increase tax collection to meet development expenditure and strengthen the economy.

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Meanwhile, discussions continue over a new IMF loan program for Bangladesh. After the Bangladesh government requested a new program last May, an IMF delegation visited Dhaka in July. Noting that the matters discussed during the visit were consistent with this year's ‘Article IV’ recommendations, Sonali Jain-Chandra said the IMF's regular communication and cooperation continue to assist Bangladesh in implementing necessary reform activities.

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