Abstract
IMF Country Report No. 22/72
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IMF Country Report No. 22/72
BANGLADESH
SELECTED ISSUES
March 2022
This Selected Issues paper on Bangladesh was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on February 15, 2022.
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Title page
BANGLADESH
SELECTED ISSUES
February 15, 2022
Approved By
Anne-Marie Gulde-Wolf
Prepared by a team led by Rahul Anand with individual chapters authored by Ritu Basu, Jayendu De, Emmanouil Kitsios, Racha Moussa, Fan Qi, Biying Zhu, (all APD), Vybhavi Balasundharam (FAD), Yaroslav Hul, Iaroslav Miller (both ICD), and Muhammad Imam Hussain (Binghamton University). Gulrukh Gamwalla-Khadivi and Pamela Polec (both APD) assisted in the preparation of this report.
Contents
ADDRESSING CLIMATE CHALLENGES IN BANGLADESH: A SMART CARBON PRICING STRATEGY: A CARBON USER FEE TO MOBILIZE CLIMATE FINANCE
A. Context
B. Considering an Early Adoption of Carbon Pricing to Mobilize Climate Finance
C. Conclusion
References
TABLES
1. Climate Policy Tools for Bangladesh
2: Impact of Carbon Fee, 2030
3: Cost Increase and Jobs at Risk in Manufacturing
THE MEDIUM-TERM EFFECT OF COVID-19 IN BANGLADESH
A. Context
B. Methodology
C. Results from Growth Accounting
D. Heading for a Resilient and Inclusive Recovery
E. Conclusion
References
TABLE
1. Growth Accounting (2000–2019)
ANNEX
I. Data
DIGITALIZATION AND PUBLIC FINANCE EFFICIENCY
A. Introduction
B. State of GovTech in Bangladesh
C. Digitalization and Revenue Collection Efficiency
D. Digitalization and Health Spending Efficiency
E. Digitalization and Education Spending Efficiency
F. Conclusion
References
TABLES
1. Tax Revenue Efficiency
2. Stochastic Frontier Analysis: Health Spending Efficiency
3. Stochastic Frontier Analysis: Education Spending Efficiency
4. Data Sources
MODERNIZING THE MONETARY POLICY FRAMEWORK IN BANGLADESH – MODEL-BASED INSIGHTS
A. Monetary Policy in Bangladesh
B. A QPM for Bangladesh
C. Transitioning to Inflation Targeting
D. Counterfactual Simulation
E. Conclusion
References
FIGURES
1. Drivers of Food Inflation
2. Model Implied Standard Deviations Under Different Policy Regimes
3. Counterfactual Simulation
TABLE
1. Ratio of Root Mean Square Error (RMSE) of the QPM-Based Forecasts Compared to the Random Walk (RW)
PREPARING FOR AUTOMATION: THE CASE OF BANGLADESH
References
BANGLADESH IN TRANSITION
A. Background
B. Recent Developments
C. Challenges Ahead
D. Bangladesh’s Gap in Selected External Growth Drivers
E. Empirical Diagnostics
FIGURES
1. Major External Accounts
2. Export Diversification
3. Tax Revenue and Exports of Goods and Services
4. Rule of Law and Regulatory Quality
5. Exports of Goods and Services and Net Remittance Income
6. Gross FDI Inflows
7. Total Trade of Goods and Services, and FDI Inflows
TABLES
1. Five-Year Average Ratio of Bangladesh and LMICs (during 2013–2017), and UMICs and HICs During their Five-Year Transition Period
2. Panel Fixed Effect Model: Exports of Goods and Services
3. Panel Fixed Effect Model: FDI Inflows
APPENDIX
I. Methodology Notes