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Thursday, 25 October, 2001, 11:29 GMT 12:29 UK
Bangladesh eyes economic package
Bangladeshi parliament, Dhaka
The Bangaldeshi administration is considering measures to boost the economy

By the BBC's Waliur Rahman

The Bangladeshi central bank has cut its interest rates by a point to 6%, as part of its effort to minimise the impact of the US slowdown.

Speculation exists that the government could soon introduce an economic stimulus package, as industrial leaders say the rate cut is not enough.

The package may include measures to encourage investment in the Bangladeshi stock market as well as further measures to revitalise the industrial sector, particularly the garment industry.

Falling exports have also prompted the Bangladeshi government to send a mission to the US next month, in an attempt to win duty-free access to that market.

Falling orders

Finance minister Saifur Rahman and the central bank governor Mohammad Farahsuddin met on Wednesday to discuss the future level of interest rates.

Since becoming finance minister, Mr Rahman has made clear his view that commercial lending rates are too high, given the threat of recession.

The country's foreign exchange reserves - at $1bn - now stand at a 10-year low.

Many US importers have cancelled orders, hitting Bangladesh hard, as about 40% of its exports are destined for the US.

Job losses

Already one thousand garment factories have shut, leading to the loss of 300,000 jobs.

Mr Rahman has also announced special measures for the garment industry, cutting lending rates from 10% to 7%.

Bangladesh Readymade Garments Manufacturers and Exporters' Association Kutubuddin Ahmed welcomed the move but said it didn't go far enough.

See also:

22 Oct 01 | Country profiles
Country profile: Bangladesh
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