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• Title: Bangladesh: First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Performance Criteria-Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Bangladesh.

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             Series: Country Report No. 04/27, February 02, 2004

• IMF Completes First Review of Bangladesh's PRGF Arrangement and Approves US$74 Million Disbursement.

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            Press Release  No. 04/03, January, 2004

• MPEF Tables:                                                                                                1. Bangladesh: Key Economic Indicators, FY00-04.                           2. Bangladesh: Quantitative Targets and Performance Criteria Under the PRGF, June 2003 - December 2004.                                   3. Bangladesh: Structural Performance Criteria and Benchmarks Under the PRGF, June 2003 - December 2004.
  
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  Series: Country Report No. 03/205 (addition), December, 2003
   

• Statement by the Hon'ble Minister M. Saifur Rahman at the BOG, 2003 Annual Meetings, September 23-24, 2003.
  
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  Press Release  No. 11, September 23-24, 2003
   

• Title: Bangladesh: 2003 Article IV Consultation and Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility--Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for Bangladesh
  
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  Series: Country Report No. 03/205, July 11, 2003
   

• Title: Bangladesh: Statistical Appendix
  
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  Series: Country Report No. 03/194, July 11, 2003
   

• Title: Bangladesh: Joint Staff Assessment of the Interim Poverty Reduction Strategy Paper
  
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  Series: Country Report No. 03/186, June 26, 2003

Recent Economic Developments

The economy of Bangladesh is undergoing recovery. Over the first half of 2003, industrial production and exports have rebounded by 5 percent. Real GDP growth is thus expected to recover to an estimated 5.2 percent for FY03, driven by agricultural production and strong domestic demand. Meanwhile, inflation remains manageable, at an underlying pace of 5 percent, as the moderate upward trend in food prices observed in early 2003 was stabilized during March-April, and the impact from adjustments in utility and energy prices dissipated gradually. Gross international reserves have been rebuilt to around US$2 billion (or two months of prospective imports) at mid-June, from the low of US$1 billion reached in November 2001.

Prudent macroeconomic policies have contributed to these results. In particular, fiscal policy has been tightened beginning in FY02; revenue was raised by 1 percentage point of GDP, mainly in the non tax area. As a result, the central government budget deficit fell to 4.7 percent of GDP (from 5.1 percent of GDP in FY01), and is on course to fall further to 4.2 percent of GDP in FY03 as budgeted, on account of both revenue measures and expenditure discipline. Monetary policy has also been restrained since early 2002, and excess bank reserves have been reduced substantially. Reserve money remained flat over 2002, through sales of treasury securities by Bangladesh Bank.

Significant steps have also been taken to renew the momentum of structural reforms. In particular, Bangladesh Bank has gained greater autonomy and expanded authority to supervise the nationalized commercial banks, key loss-making state-owned enterprises have been closed, and adjustments made to utility tariffs and energy prices.

Program Summary

The proposed PRGF-supported program builds on this record of policy implementation, and is focused on the structural reforms critical for putting the economy onto a higher growth path to achieve faster poverty reduction. Attaining a sustainable and rapid growth necessary for halving poverty by 2015—a goal in the Interim Poverty Reduction Strategy Paper (I-PRSP)—will require not only maintenance of macroeconomic stability but also a major improvement in the investment climate. For this, the authorities will need to accelerate structural reforms that are central to addressing the high cost of borrowing, bottlenecks in physical infrastructure, inadequate investment in human capital, and poor economic governance, all of which have been identified as key impediments to growth and poverty reduction efforts.

Under the program, real GDP growth is targeted to rise to 6.5 percent by FY06, to be met largely by external assistance on concessional terms, and official reserves would be built to over three months of imports by end-FY06. To achieve these goals, the key elements in the program are:

• fiscal reform, involving a sustained revenue effort and a shift in spending toward infrastructure and human capital to support growth and the Millennium Development Goals, while keeping public debt sustainable;
• reforms of nationalized commercial banks, including defining bank-by-bank resolution strategies, and in the interim, steps to strengthen bank management and restrain lending to help stem the flow of new bad loans;
• state-owned enterprise reforms, particularly closing/privatizing state-owned enterprises in manufacturing, and reforming state-owned enterprises in the energy sector
• more liberal exchange and trade regimes, by moving to a floating exchange rate regime and continued trade reform, to reduce external vulnerability.

For structural reforms to be successfully implemented, the underlying economic governance issues will need to be decisively tackled. More broadly, institutional changes to improve public resource management will be needed. In this context, the envisaged creation of an anti-corruption commission is key.

source: http://www.imf.org