Statement by the IMF Mission to Bangladesh

The statement by an International Monetary Fund (IMF) mission led by Mr. David Cowen visited Dhaka during December 6−15, 2010, conducted the 2010 Article IV consultation discussions.

Summary of economic forecasts in the statement:

Ø      Growth is expected to be slightly above 6.0% in FY2011 on the expectations that ready-made garment exports and investment demand providing a boost although they are also being accompanied by rising import growth and slowing remittance flows.

Ø      Inflation is expected to average 7.0% in FY2011, on an anticipated moderation of commodity price increases.

Ø      Following several years of a widening current account surplus, it is likely to narrow significantly to around ½% of GDP in FY2011, compared to 3¾% in FY2010. While exports should remain strong, imports are rising sharply this year due mainly to higher food, fuel, and cotton prices, with oil import volumes also growing rapidly as Bangladesh addresses its power deficit.

Ø      Remittances are expected to fall on a year-on-year basis in FY2011 mainly due to an ongoing decline in migrant worker outflows, adding pressure on the BOP.

Ø      Overall budget deficit is likely to increase by about ¾ percentage points of GDP to around 4 percent of GDP in FY2011.