News and Update: IMF wants fresh loan deal with Bangladesh

NewAge, October 23, 2007. Dhaka, Bangladesh

The International Monetary Fund has expressed its willingness to remain actively engaged with Bangladesh in any form that is deemed ‘suitable and appropriate’ by the government. This offer was made by the deputy managing director of the lending agency, Takatoshi Kato, during a meeting with the finance and planning adviser, AB Mirza Azizul Islam, in Washington on Sunday.

An IMF delegation that recently visited Bangladesh returned without making any concrete progress on a fresh loan agreement styled ‘Policy Support Instrument’ following criticism by the economists and rights organisations as well as a lawsuit against such a move. The government’s earlier loan agreement — the so-called ‘Poverty Reduction Growth Facility’ — expired recently.

A news release issued by the Bangladesh embassy in Washington said the finance adviser welcomed IMF’s support for the government’s efforts to address internal and external constraints in conformity with the goals of maintaining macro-economic stability, accelerating economic growth and expediting poverty reduction.

Mirza Aziz, in a separate meeting along with the World Bank’s vice-president for South Asia, Praful C Patel, stressed the need for scaling up the WB’s aid within the framework of the Country Assistance Strategy and giving more assistance in the form of budget support.

The WB’s executive expressed the Washington-based institution’s full support for the reform efforts by the present government and assured it that the WB would strengthen its engagement with the Bangladesh government in the implementation of the reforms agenda.

In the meeting with Mirza Aziz, the IMF executive expressed the hope that the Bangladesh government would ‘seriously keep in view the urgent need to contain the rising inflationary trend through appropriate policies which it finds appropriate’.

The adviser mentioned that the government would address, through appropriate policies, the emerging shocks resulting mainly from escalation of prices of essential products, especially petroleum products, in the international market.

The WB’s prescription of pursuing a contractionary monetary policy for arresting the rising inflation was a bone of contention as the country’s economists termed it suicidal for a growing economy.

Kato, however, appreciated the commitment of the interim government to maintain and sustain macro-economic stability by implementing the needed policies and initiating institutional reforms.

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