ECONOMIC SITUATION IN BANGLADESH

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900020068-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: July 29, 2005
• Sequence Number: 68
• Publication Date: April 12, 1974
• Content Type: MF

 Approved For Release. 2005/08/22?: CIA--RDR8.5T008~5R~001-90002.0068~2~-
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Attached is the paper on the .Economic
Situation in Bang~adesh per your request.
 Approved For Release 2005/O~~j;;jt~~Mf~~~T00875R001900020068-2
Tre Econo:-ic SitLation in Pangladesh
Bangladesh's economy regains stagnant and government
policies, population pressures, and soaring petroleuM prices
share most of the blase. Centralized planning -- state
control o: trade and nationalization measures -- have inhibited
trade and ra3de the climate for foreign private investment
unattractive. Non-food imports have fallen far. below domestic
requirerents, creating scarcities of raw materials, chemicals,
and fuels urgently needed to put industry and agriculture back
on its feet. Govern.~ent revenues needed to stimulate the
economy have also suffered since they are mainly derived from
import duties and excise taxes on goods produced with the aid
of imports. To finance government deficits, the money supply
has been increasing at a rate of 30-35$ annually and inflation
is accelerating.
Increasing population pressures will continually make
over~~ll production gains illusive. The forr;,er will require
the consumption--oriented government to zemain preoccupied
with foodgratin imports. As long as Bangladesh needs to make
large commercial purchases of foodgrains abroad, foreign
exchange resources for non-food imports will remain restricted.
Petroleum costs have exacerbated econo;nic difficulties.
Outlays for petroleum in CY 1974 will approximate $150 million,
and will greatly disturb an already precarious trade structure.
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Although Barc~ac~esh is a cool ca^didate for concessionary
arrange~:ents with petroleu:~ exporting states, none Piave
materialized. To maintain i~:-port volume at last year's levzl,
Dacca must pay out an estir,~ated $850 million this year.
Export revenues, largely for jute and jute products, are
expected to be on the ;order of 5400 million, leaving a trade
deficit cf $450 mil]_ion. Foreign ~=xchange reserves of $160
million clearly will not be'used to finance this year's deficit.
Unless substantiall new foreign aid is 4'orthcomir~g, resource
diversion from development projects to finance more expensive
Ymports will further frustrate economic development during
the next few years.
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