DHAKA, March 9 (Reuters) - Bangladesh needs to step up investment in infrastructure sectors such as road and energy to achieve its target of becoming a middle-income country by 2021, the International Monetary Fund (IMF) said on Thursday after a visit by some senior officials.
The South Asian country’s economy grew by an average of more than 6 percent a year over the past decade, but economists say it requires at least 8 percent growth to rise from being a low-income country. The economy grew 7.11 percent in the financial year ended June 2016.
“Maintaining the economy’s past growth performance will become increasingly challenging over the medium term, and will require upgrading the macroeconomic policy-making practices and institutions to support the country’s ambition to reach middle-income status,” said Brian Aitken, who led a three-member IMF committee that arrived in Dhaka on Feb. 26.
The committee met with senior finance ministry officials, representatives from business and banking sectors, labour unions and think tanks, among others.
Aitken said the team and authorities discussed policies and reforms to “preserve macroeconomic stability and contain risks”.
Bangladesh’s heavy reliance on exports and remittances exposed the country to changing external environment, he added.
The country’s foreign exchange reserves hit a record high of $32.56 billion at the end of February on the back of steady garment exports and remittances from Bangladeshis working overseas - the key drivers of the country’s more than $200 billion economy.
“The investment for infrastructure, particularly energy and power, is definitely needed to increase manifold and on this sector, we are in the right direction,” said Nasrul Hamid, the country’s junior minister for power and energy.
Supporting the recommendations of the IMF, he said over the next five years Bangladesh would require up to $35 billion to invest in this area, and out of that the country has so far received proposals worth between $10 billion and $15 billion.
“Now, we are scrutinising all the proposals, mainly from China, and over the next few months we will take a concrete decision,” he told Reuters. (Reporting By Serajul Quadir; Editing by Subhranshu Sahu)