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Meeting Summary: Policy Outcomes & Actions on Bangladesh's MTMF March 31, 2003

An overview of the discussions on policy outcomes and actions for Bangladesh's Medium-Term Macroeconomic Framework. Key points include growth, inflation, revenue increase, ADP spending, financial needs, private sector credit, and export growth post-MFA phase-out.

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Meeting Summary: Policy Outcomes & Actions on Bangladesh's MTMF March 31, 2003

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  1. MDTA meeting on MTMF March 31, 2003

  2. The new MTMF • Policy outcomes are somewhat less ambitious • Policy actions are somewhat more ambitious • Has been agreed with IMF staff

  3. Growth is lower, inflation is higher

  4. A sharper increase in revenues

  5. A smaller ADP

  6. Less need for financing

  7. More credit for private sector in outer years

  8. After recovering, imports and exports grow at lower rates

  9. Reserves pick up more quickly,but grow at slower pace

  10. Comments made in subgroups on previous MTMF • Growth and inflation targets are ambitious—which sectors are going to drive growth? Growth of credit to private sector seems insufficient to support growth targets. • Exports seems to grow too quickly with weaknesses in RMG/phasing out of MFA. • What would engender increase in FDI? • Can increase in ADP spending be absorbed? • What is the relation between the PRS and additional foreign financing foreseen?

  11. Suggestions for MDTA inputs to JSA • Could be framed as questions to be answered in the development of MTMF toward full PRSP. • More emphasis is needed on the role of FDI. How much is needed to support growth target? What policy actions (including on non-economic governance) are needed to achieve higher FDI? • Which economic sectors are going to drive growth? How do expenditure framework and other actions in policy matrix support this? • What type of policy regarding trade, import tax, and the exchange rate would yield this pattern of imports and exports? • How will Bangladesh achieve export growth in FY06 when MFA is phased out?

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