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Dec 14, 2011

IMF Statement on Bangladesh Needed Reforms

The following is a press release by the IMF. For the good of the people of Bangladesh, hopefully, the issues reflected in the following statement by the IMF Mission to Bangladesh will be accomplished by the government.

Bangladesh is a wonderful country to live and do business in, because of its vibrant and dedicated population and rich and proud history. However, deep government and systematic problems has allowed the country to fester in poverty. The size of the population (160 million) should allow the nation to be on par in GDP per capita with neighboring nations including Thailand, Vietnam and India.

The IMF is not always correct, but the basic issues facing Bangladesh are well-known and have not been properly addressed for decades. Hopefully, the government has the power to get the system in order to allow the middle-class to grow and thus fuel a vibrant economy with the assistance of experienced Bangladesh and foreign businesses fueling the export, service and resources industries.
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An International Monetary Fund (IMF) mission visited Dhaka during November 30–December 13, 2011 to discuss a reform program with the government of Bangladesh for possible support under the IMF’s Extended Credit Facility (ECF).

The mission met with the Honorable Prime Minister Sheikh Hasina, her economic and energy advisors, the Minister of Finance, Finance Secretary, Bangladesh Bank Governor, and other senior officials, as well as private sector, development partner, and civil society representatives.

Discussions centered on near-term macroeconomic policy priorities and growth-critical structural reforms, which could form the basis for a program arrangement under the ECF.

The mission noted that well-coordinated policy adjustments were needed to mitigate balance of payments, fiscal, and inflation pressures and contain macro-financial risks faced by Bangladesh. It stressed the need for forceful policy actions on both the macroeconomic and structural fronts in light of a recent weakening in the global economic environment, rapid rise in oil imports and subsidy costs, and a pronounced increase in government borrowing from the banking system.

In this context, agreement was sought on a range of measures needed to reduce external and domestic imbalances, restore macroeconomic stability, and rebuild foreign reserve buffers. Discussions focused on policy moves to engender moderate monetary and fiscal tightening, backed by greater exchange rate and interest rate flexibility. In keeping with the government’s reform plans, commitments were also sought on more deep-seated measures needed to bring lasting adjustment, mainly to tax policy and administration, public financial management, financial sector oversight, and the trade and investment regime.

A finalization of program understandings awaits further consultation among officials and with the IMF over the near term to ensure timely implementation of envisaged policy adjustments.