DHAKA, Jan 4, 2020 (BSS) – Bangladesh now can afford more borrowing
to address the economic fallout from COVID-19 pandemic as the country
managed public debt to GDP ratio in a conservative way, as per a
policy note, prepared by Bangladesh Bank (BB).
According to the note, Bangladesh has experienced low debt to GDP
ratio of around 34 percent of GDP since last few years.
Debt statistics report also shows that Bangladesh is at low risk in
terms of vulnerable debt sustainability. Therefore, the country can
increase their expenditure, if needed, at significant level through
domestic borrowing and foreign loans to support affected sectors of
the economy.
The report also recommends that the government may improve tax
compliance with proper implementation of tax reform policies for
improving tax-GDP ratio in the near and medium term.
Chief Economist’s Unit of the central bank release the policy note,
titled ‘COVID-19 Crisis and Fiscal Space for Bangladesh Economy: A
Comparative Analysis with South Asian Countries’.
It also pointed out that Bangladesh maintained around 10 per cent of
tax to GDP ratio, which is lower than all other south Asian countries,
except India.
This report also finds that Bangladesh was the lowest spending
country among South Asian countries and the fiscal deficit as percent
of GDP for Bangladesh is below 5 percent in the last decade.
As per the policy note, COVID-19 pandemic continued to spread and
impacted Bangladesh economy since March 2020, reflecting in a sharp
decline in growth rate of real gross domestic product (GDP) to 5.24
percent in FY20 as compared to a record high of 8.15 percent growth in
FY19.
Likewise, other South Asian countries are not exception as being
affected by COVID-19, slowing down their economic growth as well. In
response to combat against the possible economic disruptions because
of the pandemic, South Asian countries including Bangladesh have been
taking extensive fiscal measures depending on their own capacities.