Activists torpedo IMF deal in Bangladesh

5 October 2007

Bangladesh’s caretaker government, which has been in power since a political crisis over elections in late 2006, has faced controversy over its negotiations with the IMF for a new programme following the end of Bangladesh’s PRGF in June. Opposition by activists and business, demands for greater transparency in the negotiations and a public interest lawsuit claiming that the caretaker government does not have the authority to sign such an agreement forced reconsideration. At the end of the September IMF mission, the Fund’s mission chief concluded that “we are not sure that it’s the best time to sign a deal.” The same week, the governor of the Central Bank Salehuddin Ahmed rejected the IMF’s advice on monetary policy: “We are not tightening the monetary policy as per their prescription. What they are not saying is not important, we will take our decision.” The finance ministry also reportedly rejected IMF recommendations on tax and tariff policy.