Press Release No. 98/52

Press Release: IMF Approves US$138 Million Emergency Assistance for Bangladesh

October 29, 1998

The International Monetary Fund (IMF) approved a request for emergency assistance by Bangladesh equivalent to SDR 98.13 million (about US$138 million) to assist in the country’s economic recovery in the aftermath of devastating floods.

From mid-July to late September this year, Bangladesh was struck by severe floods that at its worst had inundated three-fourths of the country. The floods have inflicted human hardship on a large scale and caused widespread damage to the nation’s infrastructure. The adverse impact on the 1998/99 budget is provisionally estimated at 1.6 percent of GDP, reflecting tax revenue losses and additional outlays for relief operations, and for rehabilitation. Bangladesh has taken several steps to strengthen the macroeconomic framework and the IMF stands ready to provide technical assistance in strengthening tax administration.

Bangladesh has made considerable progress over the last few years in stabilizing and liberalizing its economy. Although economic growth will slow to 3-4 percent in the current fiscal year as a result of the floods, real GDP growth was a robust 5½ percent in 1997/98, led by strong export performance and a recovery in the manufacturing sector. Looking ahead, the government has to accelerate structural reforms in three key areas--revenue, banking and public enterprises. This will lay the foundations for sustained economic growth.