Dhaka, Apr 25 (UNB) – Bangladesh Bank should proceed very cautiously in issuing any new bank license, visiting IMF mission chief David Cowen said here on Wednesday.
 
“Bangladesh Bank should ensure that it has the resources it needs to properly supervise and regulate all the banks, including possible new banks on the list,” Cowen told reporters at a press meet at the central bank conference hall before wrapping up his 10-day visit to Bangladesh.

Cowen, Deputy Divisional Chief for Asia and Pacific Department, IMF, also said the central bank should ensure that the liquidity conditions are supportive in allowing new entrances into the market.

IMF (International Monetary Fund) resident representative Eteri Kvintradze was also present at the meeting where Cowen made a presentation on macroeconomic outlook and the government’s reforms supported by the IMF’s ECF (Extended Credit Facility).

On required credit support for the private sector, he said, “There should be adequate room for the private sector credit growth…which, we all understand, will be important in helping  the government achieve GDP growth target.”

Cowen hoped that the government would continue to manage its subsidy cost carefully and said the government is also committed to the programme and to ‘moving to an automatic fuel price adjustment mechanism by the end of the year.’

“We believe with this fiscal space they will have adequate resources to prop up various social safety nets so that the government can provide resources to those who are the most vulnerable to fuel and electricity price adjustment.”

Making observations on the country’s GDP growth, Cowen forecast a 5.5 percent economic growth in the current fiscal, down from 6.7 percent in 2011.

Bangladesh Bank, however, disagreed with the IMF forecast and said the GDP (gross domestic product) would be around 6.9 or above.

“The central bank, after analysing the data, thinks it would be around 6.9 or above,” BB general manager AFM Asaduzzaman told UNB soon after the IMF comment.

Focusing on the main reform pillars under the IMF’s Extended Credit Facility (ECF), Cowen said the IMF expects tax revenue to rise gradually and Bangladesh attracts more foreign direct investment which will increase the country’s export base.

“Moderate fiscal consolidation and sound debt management will underpin macroeconomic stability,” he IMF official said.
 
He also said the government needs to increase resources for social safety net programmes.
    
On business climate, he said a stable macroeconomic environment, tax and financial sector reforms, and expanded social and physical infrastructure are necessary conditions for creating a more growth-friendly business climate.  

Cowen said macro-pressures and growth-critical imports are putting strains on the current account and increasing external vulnerability, necessitating Bangladesh rebuild its reserve buffer.

He said the ECF-supported programmes – fiscal policy reforms, monetary and exchange rate policy, financial sector reforms and trade and investment reforms – would help restore macroeconomic stability, strengthen the external position, and engender higher, more inclusive growth.