IMF agrees $987 mln loan package for Bangladesh

The International Monetary Fund on Wednesday announced a nearly billion dollar loan package to reform Bangladesh's ailing economy. Under the three year deal worth $987 million, Bangladesh will embark on wide-reaching structural reforms to get its economy back on track and ease long-term poverty. Battered by inflation, budget problems and a painful trade deficit, the country has plunged toward fiscal crisis during the past year. Rising global oil prices have delivered a painful double whammy, spurring double-digit inflation while siphoning scarce foreign currency out of the country. Meanwhile government fuel subsidies -- worth as much as $3.4 billion this year -- have helped the poor but decimated the country's budget and forced the authorities to borrow from private banks. "Macroeconomic pressures in Bangladesh have intensified over the last 18 months," said David Cowen, the IMF's mission chief for Bangladesh. He said that growth is expected to slow to 5.5 percent this year, down from 6.7 percent last year, while non-food inflation in March hit nearly 14 percent. The reforms include consolidating fuel subsidies and finding ways to pay for them; adjusting monetary policy to tackle inflation, overhauling the tax code, rewriting banking laws and eliminating trade barriers. Some $141 million is available immediately from the IMF.