US embassy cable - 05DHAKA1305

C O N F I D E N T I A L DHAKA 001305 
 
SIPDIS 
 
E.O. 12958: DECL: 03/22/2015 
TAGS: EAID, EFIN, ECON, PREL, BG 
SUBJECT: IMF ROUTINE REVIEW TEAM MAKES POSITIVE INITIAL 
ASSESSMENT 
 
REF: DHAKA 00362 
 
Classified By: Classified By: Econ Chief David Renz; reason 1.4 b. 
 
1. (C) An early March IMF preliminary review of the BDG's 
progress under the Poverty Reduction and Growth Facility 
(PRGF) program was positive, according to IMF country 
representative, Jonathan Dunn during a March 16 meeting with 
EconOff. Under the PRGF $500 million loan arrangement, the 
BDG must privatize its four National Commercial Banks (NCB), 
starting with the Rupali Bank, the smallest of the NCBs.  The 
visit was a surprising contrast to a negative review in 
October 2004 and signs of little progress leading up to the 
March review (reftel). 
 
2. (C) The IMF team left BD last week satisfied with BDG 
commitments to privatize Rupali Bank and a positive 
assessment of the BDG's progress.  According to Dunn, the 
team recognized that the high cost of recapitalization was 
the key issue delaying privatization of the bank.  Most of 
the NCBs are bankrupt and need substantial BDG investment to 
recapitalize the banks prior to privatization. The BDG must 
present its plan for the privatization of Rupali bank to the 
IMF by the end of March. The IMF team will then return for 
the review and assessment of the plan in early April.  A full 
report will be available after the April visit. 
THOMAS