IMF ROUTINE REVIEW TEAM MAKES POSITIVE INITIAL

C O N F I D E N T I A L DHAKA 001305

SIPDIS

E.O. 12958: DECL: 03/22/2015
TAGS: EAID EFIN ECON PREL BG
SUBJECT: IMF ROUTINE REVIEW TEAM MAKES POSITIVE INITIAL
ASSESSMENT

REF: DHAKA 00362

Classified By: Classified By: Econ Chief David Renz; reason 1.4 b.


1. (C) An early March IMF preliminary review of the BDG's
progress under the Poverty Reduction and Growth Facility
(PRGF) program was positive, according to IMF country
representative, Jonathan Dunn during a March 16 meeting with
EconOff. Under the PRGF $500 million loan arrangement, the
BDG must privatize its four National Commercial Banks (NCB),
starting with the Rupali Bank, the smallest of the NCBs. The
visit was a surprising contrast to a negative review in
October 2004 and signs of little progress leading up to the
March review (reftel).


2. (C) The IMF team left BD last week satisfied with BDG
commitments to privatize Rupali Bank and a positive
assessment of the BDG's progress. According to Dunn, the
team recognized that the high cost of recapitalization was
the key issue delaying privatization of the bank. Most of
the NCBs are bankrupt and need substantial BDG investment to
recapitalize the banks prior to privatization. The BDG must
present its plan for the privatization of Rupali bank to the
IMF by the end of March. The IMF team will then return for
the review and assessment of the plan in early April. A full
report will be available after the April visit.
THOMAS