IMF loan to Bangladesh might slow growth

18 February 2011

The IMF’s “broad agreement in principle” with the Bangladesh government to lend $1 billion under the Fund’s Extended Credit Facility (see Update 71) has been criticised by a local think tank. The loan proposal which is planned to be discussed by the Fund’s board in late February, conditions disbursement of money on fiscal policy reforms such as the implementation of a “new” value-added tax and monetary tightening to target inflation. A January analysis by Bangladeshi think tank Center for Policy Dialogue (CPD) criticised Bangladesh’s plans to borrow from the IMF, saying the fiscal reforms of the loan agreement “might limit the growth-supportive policy space for the government.”