## Press Release: IMF Executive Board Approves US$217.7 million in Emergency Assistance for Bangladesh

_IMF News, April 2, 2008_

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**Canonical URL:** [Press Release: IMF Executive Board Approves US$217.7 million in Emergency Assistance for Bangladesh](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0870)

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## Bibliographic details
- Published: April 2, 2008

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### Emergency assistance approved
- The Executive Board approved SDR 133 million (about US$217.7 million) in emergency assistance to Bangladesh.
- Purpose: to assist the government's efforts to deal with the impact of severe damage from a November 2007 cyclone that followed severe monsoon-related flooding.
- Emergency assistance features:
  - Repayment: in eight equal quarterly installments over 3¼ to 5 years from the disbursement date.
  - Rate of charge: subsidized to 0.5 percent per annum for PRGF-eligible countries hit by natural disaster, subject to resource availability.

### Human and economic impact of the disasters
- Cyclone Sidr and two preceding floods resulted in at least 4,400 deaths.
- Total damage is estimated at US$2.7 billion, or 3.7% of Bangladesh's GDP.
- Major damage concentrated in agriculture, housing and infrastructure.
- Balance of payments pressure due to a sharp rise in disaster-related imports, including large volumes of food.

### Government and international response
- Government actions cited:
  - Allocated food to expand the Vulnerable Group Feeding Program and provide for open market sales of rice.
  - Budgetary funds allocated to augment social safety nets and to fund additional subsidies for fertilizer and fuel.
  - Increased revenue collections, reallocation of funds within the budget, and additional donor assistance kept the budgetary impact within the parameters of the FY2008 budget.
- IMF assistance objective: support Bangladesh's international reserve position to finance needed imports while allowing international reserves to remain at about three months of import coverage.
- Emphasis on ensuring pledged aid commitments from donors are effectively mobilized and efficiently used for recovery and reconstruction.

### Macroeconomic outlook and risks
- Damage to the agricultural sector will reduce economic growth in FY2008.
- Recovery expectations: a recovery in agricultural production, reconstruction activity, and an improved business climate should allow growth to recover in FY2009 to Bangladesh's medium-term potential growth path.
- Risks and considerations:
  - Limits to implementation capacity during relief and reconstruction.
  - Potential inflationary pressures.
  - Authorities intend to contain domestic financing of the government to budgeted levels.

### Policy recommendations and institutional measures
- Continued support from the international community, including IMF emergency assistance, is crucial for financing imports and supporting reserves.
- Government intentions and reforms highlighted:
  - Develop a specific Disaster Response Fund.
  - Explore other means of financial support.
  - Establish a dialogue with development partners on a risk mitigation agenda related to global climate change.
  - Maintain macroeconomic stability and pursue reforms in revenue administration and policy, expenditure management, energy pricing, and state-bank reform.

*Press Release No. 08/70, April 2, 2008*

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## References

- [Bangladesh and the IMF](http://www.imf.org/external/country/BGD/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Public Information Notice No. 05/8](https://www.imf.org/external/np/sec/pn/2005/pn0508.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0870_