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Wednesday, 30 October, 2002, 12:19 GMT
Bangladesh wins praise for reforms
Last shift at the Adamjee jute mill
Closing the Adamjee jute mill was a "hard job"
The Asian Development Bank (ADB) has praised Bangladesh's programme of economic reforms, and promised to continue its $330m-a-year (212m) development programme.

The country's central bank, meanwhile, has launched a programme to persuade Bangladeshis living abroad to invest their hard currency earnings at home.

It hopes that new government bonds - issued in US dollars and taka - will attract enough money to bolster its much-depleted currency reserves.

Bangladesh is one of world's most densely populated and least developed countries, with more than 127m citizens.

Its economy is dominated by agriculture, and economic reforms have been hampered by corruption and political squabbling.

A 'hard job' well done

Prime Minister Khaleda Zia
Prime Minister Khaleda Zia promises to root out corruption

The government of Prime Minister Khaleda Zia, elected a year ago with a huge majority, is now trying to turn things around.

It plans to sell dozens of state-owned companies to save itself millions of dollars in subsidies.

And despite strong resistance it recently closed down the Adamjee Jute Mills with the loss of 25,000 jobs.

The factory, in the industrial town of Narayanganj near the capital Dhaka, was said to be the world's largest producer of jute, but rampant corruption and declining demand for jute products conspired to make the mills run at a loss for the past three decades.

ADB president Tadao Chino, who is currently visiting Bangladesh, singled out the closure of the Adamjee Jute Mills as a "hard job" well done.

Loans and grants

During the past years, the Adamjee mills cost the Bangladeshi government more than 10bn taka ($172.7m, 111m).

Woman shovelling grain
Agriculture dominates Bangladesh's economy
Mr Chino said the Zia administration should continue with its much-needed economic reforms.

He said there was "an urgent need to improve good governance", and warned that "the establishment of an independent anti-corruption commission is critical and should be expedited as quickly as possible".

The ADB has supported Bangladesh for the past 20 years, and plans to give the country a combination of low-interest loans and technical assistance grants worth $1bn over the next three years.

Wanted: Hard cash

The economic reforms may ensure the goodwill of international donors, but the country's central bank is hoping to gain the support of the many Bangladeshis working abroad.

Bangladesh Bank plans to launch US dollar denominated three-year savings bonds, which will pay interest at a rate of 6.5% in the first year, 7% in the second and 7.5% in the final year. The drawback is that interest will be paid in the local currency.

For those who doubt the strength of the taka, investment bonds will be on offer, paying interest in dollar, albeit at a rate of one percentage point below the savings bonds.

Bangladesh's hard currency reserves are running low, with the remaining $1.72bn covering just under two-and-a-half months of imports.

The dollar shortage has resulted in a weaker taka. An official at private bank in Dhaka said: ""The taka has become weaker due to non-availability of greenback in the market."

See also:

16 Aug 02 | Country profiles
30 Jun 02 | South Asia
20 Jun 02 | Business
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