introduction
The major objectives of planned development have been increased national income, rural development, self-sufficiency in food, and increased industrial production. However, progress in achieving development goals has been slow. Political turmoil and untamed natural hazards of cyclone and flooding have combined with external economic shocks to persistently derail economic plans.
In 1991, with the reinstitution of elected government, a new economic program was initiated that included financial sector reform and liberalization measures to encourage investment, government revenue improvement efforts (realized largely through implementation of a value-added-tax), and tight monetary policy. Income transfer measures, Food-for-Work, and other programs were also implemented to help protect the poorest segments of the population from the transitional effects of structural reform.
Fiscal year 2000 was marked by a sharp increase in monetary expansion due to unprecedented borrowing from the banking sector (though the sale of treasury bills) to cover budget shortfalls due. Domestic borrowing increased primarily due to the reduced availability of external concessional financing.
For 2001/02, however, the IMF predicted a sharp decline to around 3.5% due to the global economic slowdown and the contractions after the terrorist attacks of 11 September 2001 on the United States.
Economic Environment
During the early 1990s, Bangladesh made considerable progress in stabilizing and liberalizing its economy. As a result, inflation was much lower than previously, and average annual real GDP growth in 1992-98 was above 5%, largely led by exports involving ready-made garments (RMGs). Indeed, one of the most striking features of Bangladesh’s trade is that textiles and particularly clothing dominate exports: their combined share grew from 70.4% in 1992 to 83.5% in 1998; by