IMF's encouraging remarks

It is heartening to note that 'despite the floods there has been progress on structural reforms'; 'appropriate fiscal and monetary policies have underpinned Bangladesh's strong economic performance'; and that 'the macroeconomic performance has remained strong to-date'. The lending commitments of the IMF and their disbursements under Poverty Reduction Growth Facility (PRGF) are on course. We commend the government, the finance ministry and the Bangladesh Bank for the positive elements in macroeconomic management. That a steady hand is behind all this is not lost on us.

The IMF has revised its earlier projections on GDP growth and the rate of inflation. The flood effects coupled with the expiry of Multi-Fibre Arrangement (MFA) are likely to bring down the GDP growth from 6 percent predicted earlier on to 5.2 percent. The soaring international oil prices and the losses due to floods could lead to 6.8 percent inflation in place of 5 percent as previously projected.

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Bangladesh is under pressure to raise oil prices to offset the inflationary trend and cut back on deficit financing. But we must be prepared to live down the fallout of an increase in the internal oil price.

The rise in international oil prices is not in our hands, it's beyond our control. But what certainly lies within our power to alleviate are the non-economic factors like bribery, inefficiency, and extortion, both silent and noisy. The local consumers are caught between the devil and the deep sea. On the one hand, the rising international prices are wringing them, and on the other, they are being squeezed by the extortionist elements leading to price mark-up across the board. Where are they to go?