International Monetary Fund (IMF) has said the resurgence of the political unrest since January this year will cast a negative impact on the country’s long-term investment prospect.
Although the country’s economy gathered momentum in the first half of the current fiscal year, the second half didn’t begin well with the political unrest taking a toll on the economy and hurting growth and long-term investment prospects, said visiting IMF Mission at a press conference yesterday.
“We hope the GDP growth will be 6.1% in the current fiscal year, but it depends on a stable political situation. Bad political situation is taking a toll on the economy,” said Rodrigo Cubero, head of visiting IMF Extended Credit Facility (ECF) programme review team.
The release of the final two tranches of the ECF programme, worth around $280m, is now under the review of the IMF mission which will see if the conditions of the release of the fifth tranche have been met.
The team is considering impacts of the political unrest on the country’s economy, reduction of domestic fuel oil price and taking of another IMF credit.
Rodrigo Cubero, Deputy Division Chief of IMF in the Asia and Pacific Department, also said there was a direct impact on the country’s service, transportation, and agriculture sectors along with an indirect impact on several other sectors.
“We hope the GDP growth of the country will hover around 6% to 6.1% in the current fiscal year which definitely relies on political stability.” In his last budget speech, Finance Minister AMA Muhith announced the GDP growth would be 7.3%.
In the written speech, Rodriago said the inflation had eased with low food prices, but the market faced supply chain disruptions.
The external current account is expected to shift to a deficit on the heels of strong import growth and moderation in export while the foreign exchange reserves have continued to increase, he stated.
