core sector communique

Statement on the IMF Mission to Bangladesh

February 15, 2012

An International Monetary Fund (IMF) team visited Dhaka during February 7−15, 2012. It continued discussions on the government reforms aimed at addressing the macroeconomic pressures facing Bangladesh and building sustainable growth, for which support is being sought from the IMF under the Extended Credit Facility (ECF). During the visit, the team met with Minister of Finance Abul Maal Abdul Muhith, Economic Advisor to the Prime Minister Mashiur Rahman, Bangladesh Bank Governor Atiur Rahman, Finance Secretary Mohammad Tareque, and other senior officials, as well as with various development partners and private sector representatives.

At the end of the visit, Mr. David Cowen, head of the IMF mission to Bangladesh, issued the following statement in Dhaka:

“Constructive discussions were held with the Bangladesh authorities on an economic reform program for which they are seeking support under ECF. In this context, discussions centered on the authorities’ plans to undertake sustained macroeconomic stabilization measures and supportive structural reforms aimed at reducing external and fiscal imbalances, rebuilding a foreign reserve buffer, and putting Bangladesh on a higher sustained growth path.

“In support, the authorities have taken a number of upfront measures to address macroeconomic pressures currently confronting Bangladesh. Foremost, greater exchange rate and interest rate flexibility is being allowed, helping to absorb external pressures and transmit necessary monetary policy tightening, in line with achieving program objectives. Discussions also centered on adopting an appropriately restrained fiscal policy, ensuring a continued sound debt management strategy, and undertaking growth-critical reforms in tax policy and administration, public financial management, the banking and financial sectors, and trade and investment policies.

“Much focus was placed on measures needed to address fiscal pressures, which stem mainly from rising fuel imports and associated subsidy costs, and to move forward on a new value-added tax law, as a key plank of the reform program. With timely progress on these and other agreed commitments, the Bangladesh authorities expect to reach an ad referendum agreement with the IMF on an ECF arrangement in the near future.”