Dhaka, Dec 20 (IANS): The International Monetary Fund (IMF) has forecasted a 6.6 per cent GDP growth for Bangladesh in the current fiscal year 2021-2022 (July 2021-June 2022).

The projection came after an IMF staff team, led by Rahul Anand, visited Dhaka from December 5-19, reports Xinhua news agency.

"Despite being hit by multiple waves of the Covid-19 pandemic, quick and decisive actions by the authorities, supported by the external environment, led to a much quicker rebound than Bangladesh's regional peers," the IMF team said in a statement posted on its website on Sunday.

"Growth is expected to pick up to 6.6 per cent in FY22 as the impact of Covid-19 abates and policies remain accommodative," it said.

Reflecting non-food price inflation and recent fuel price increases, according to the IMF, inflation is projected to be slightly higher than the authorities' target.

The fiscal deficit is projected to reach 6.1 per cent of the GDP in FY22 as the pandemic-related spending increases, it said.

"With the economy rebounding, the central bank should closely monitor inflationary pressures and stand ready to normalise," said the IMF team.

Caps on the lending and borrowing rates limit the policy space and should be phased out to strengthen market-based pricing and to improve credit allocation and monetary transmission, it noted.

"Greater exchange rate flexibility, together with safeguarding foreign exchange reserves, will help buffer external shocks," the IMF team said.