B Mirror Report: The International Monetary Fund (IMF) has emphasized the need for Bangladesh to undertake ambitious reforms in its revenue and financial sectors, stating that the current period is an opportune time for a newly mandated government to act decisively.

Speaking at a press briefing on regional economic developments in Washington on Thursday, Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, highlighted that Bangladesh requires substantial progress in revenue mobilization, financial sector restructuring, and exchange rate reforms.

Srinivasan, who visited Bangladesh last month and held meetings with Prime Minister Tarek Rahman and other senior officials, noted that the country’s revenue base remains weak, limiting its ability to support vulnerable populations during economic shocks.

“Bangladesh’s revenue-to-GDP ratio is among the lowest globally and has declined further over the past three years,” he said, adding that improving revenue collection is critical to sustaining both short- and long-term economic growth.

Responding to a question comparing Bangladesh with Sri Lanka, Srinivasan said both countries are under IMF-supported programs, but Sri Lanka has made notable progress in increasing tax revenues and building financial buffers over the past three years. This has enabled it to provide targeted and temporary support to those affected by energy shocks.

In contrast, Bangladesh faces greater challenges in extending such support due to limited fiscal capacity. “Given the hardship faced by people, it is crucial that available resources are used in a targeted manner,” he added.

On the possibility of IMF financing for Bangladesh’s energy imports, Srinivasan said discussions are ongoing with the authorities, and outcomes will depend on continued engagement.

The IMF also warned of rising risks for Asian economies due to volatility in global energy markets and dependence on fossil fuel imports. According to its latest report, energy consumption accounts for around 4 percent of GDP in the region nearly double that of Europe with some countries such as Malaysia and Thailand exceeding 10 percent.

Due to limited domestic production, many Asian countries rely heavily on imported energy, making them vulnerable to price shocks. The IMF noted that if energy prices rise significantly and remain elevated, economic output in major Asian economies could decline by up to 0.8 percent by 2027, and in severe scenarios, losses could reach as high as 2 percent.

Countries with low energy reserves, limited fiscal space, and high dependence on remittances, tourism, or fertilizer imports are expected to face the greatest risks.

Despite these challenges, Srinivasan said Asia continues to remain a key driver of global growth, although expansion is expected to slow slightly. Regional growth is projected to decline from 5 percent in 2025 to 4.4 percent in 2026 and 4.2 percent in 2027.

He stressed that policymakers must focus on managing short-term energy shocks while maintaining economic stability and ensuring accurate market signals for sustainable growth.