ABSTRACT
Bangladesh is one of the poorest countries in the world with a per capita income of $US 210 (World Bank 1992). The per capita income has remained more or less stagnant for many years as a result of the slow rate of growth of GDP and a rapid rate of population growth. After independence from Pakistan in 1971, it took several years for Bangladesh to recover from the damages of the Liberation War during 1970-1. The First Five Year Plan 1973-8 initiated the huge task of reparation but it was not until 1975 that GDP was restored to its 1969 level. Hence, the 4 per cent average annual growth rate during this period led to a marginal improvement in the country’s standard of living. In the early 1980s, the country was faced with severe economic problems like mounting external debt, huge fiscal and current account deficits and low rates of growth of value added in key sectors of the economy. These problems were precipitated by international recession, declining terms of trade and a stagnant flow of external resources. To cope with these problems, the World Bank and the IMF recommended Bangladesh to undertake major policy reforms. Concessional loans by the World Bank and the IMF’s Enhanced Structural Adjustment Facilities (ESAF) were made conditional on policy reforms being undertaken.
