IMF approves loan to Bangladesh...

The Executive Board of the International Monetary Fund (IMF) approved a three-year arrangement for Bangladesh under the Extended Credit Facility (ECF) in a total amount equivalent to US$987 million, the largest ever loan of IMF under ECF program.

Please find the following relevant documents:

1. Press release of IMF on the issue. 

2. Letter of intent, Memorandum of Economic andFinancial policies, and Technical Memorandum of Understanding. 

Four main reform pillars under program objectives: 

1. Moderate fiscal consolidation and sound debt management, supported by tax and public financial management reforms;

2. A restrained monetary policy, anchored by sound fiscal performance and exchange rate and interest rate flexibility;

3. Strengthened financial sector governance centered on proper managerial and operational controls in banks, clear oversight responsibilities and strong risk-based supervision; and

4. Trade and investment reforms in terms of reductions in trade barriers and distortions and improvements in business climate.

Comment: The press release indicates that GDP growth of Bangladesh would be slower to 5.5% in FY12 against the government forecast of 7.0%. It doesn't seem a realistic one, rather may help the Fund to justify its program.