Tackling Recession Fallout: Dhaka says no to IMF support offer

IMF offers Bangladesh support in its efforts to offset any negative impact the country may face due to the global financial crisis, but Bangladesh says it does not need such assistance right now.

IMF Director of the Asia and Pacific region Anoop Singh at a press briefing yesterday said IMF has increased its assistance globally and is ready to help Bangladesh. A close dialogue will be maintained over the coming months, he added.

Bangladesh Bank Governor Salehuddin Ahmed told journalists: “IMF has proposed to give assistance if there is any pressure on balance of payment. However, we have said our overall economic situation is still strong. So we don’t need assistance at the moment.”

The central bank governor added the IMF proposal might be considered if any negative impact is found after getting the statistics of January and February.

A three-member IMF team led by Singh yesterday met members of the new government and discussed how best IMF could support Bangladesh’s economic reform efforts.

The team met Prime Minister Sheikh Hasina, Finance Minister AMA Muhith, Planning Minister AK Khandker, Adviser for Finance and Planning Mashiur Rahman, Bangladesh Bank Governor Salehuddin Ahmed and other government high-ups.

“Bangladesh’s economy has been able to resist thus far some of the effects of the global financial crisis. The domestic economy has retained momentum from a favourable agricultural performance and Bangladesh has benefited from the fall in food, fuel and other commodity prices,” Singh said.

“Moreover, limited capital account dependence has largely protected the country’s banks and stock market from the first round impact of the global crisis,” he added.

“However, pressures from the global slowdown are building and growth could begin to moderate. In particular, demand has weakened sharply in Bangladesh’s major export markets in the European Union and North America, and although remittances remain robust there has recently been a decline in the number of workers leaving Bangladesh for employment abroad,” the IMF official observed.

He went on to say, “In this context, the new government is looking to improve the investment and growth orientation of the economy through public sector and financial reforms.

“An important objective is to increase the support of government spending for infrastructure and social investment, thereby also boosting the economy’s medium-term growth potential and accelerating poverty reduction. Another important dimension is financial sector reforms to strengthen the resilience of the sector and broaden and deepen domestic financial market.”

Before the press briefing, the IMF team held about a one-hour-long meeting with the Bangladesh Bank governor and high officials.

Later the governor told the reporters, “Bangladesh does not need any overall bail-out package like the US. However, assistance may be needed in some sectors.”

In the morning after the meeting with the IMF team the prime minister’s Economic Affairs Adviser Mashiur Rahman at the finance minister’s office told the reporters the recession has not yet affected the country’s economy, but it will. He added nobody can say till now what extent the impact will be.

Finance Minister AMA Muhith said the economic condition of the country remains good so far and there was nothing to be worried about the impact during the current fiscal year.

“We’ll have to think about the next fiscal year,” he added.

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