TNAG-0597-FCO40-744-Future-of-Dependent-Territories-territorial-studies-1977 — Page 61

DRAFT SPECIMEN COUNTRY POLICY PAPER

1. Economic and Social Background

BANGLADESH

With a population of 76 million, a CNP of about $100 per head and with the population increasing some 2.3% per year, Bangladesh is one of the poorest countries in the world and the one most in need of aid.

2. The economy is heavily dependant on rice, jute, tea and foreign aid. Under the new political regime a considerable measure of discipline and efficiency have been introduced and this combined with favourable climatic conditions has enabled the Government to secure a measure of economic stability and growth. Inflation has been reduced sharply and the balance of payment situation has been drastically improved. Nevertheless the balance of payments is still very heavily aid-dependent and of foreign exchange are provided from this source. Foreign aid also provides Y of public sector development expenditure. The foreign debt ratio is Z and is inordinately high for a country such as Bangladesh. The principal sources of aid are..

3. The Government has recognised that the wholesale nationalisation of enterprises (which was unavoidable once their Pakistani owners left) has had a detrimental` effect on economic development and steps are being taken to loosening public sector control and returning some of them to private enterprise. The level of poverty is no widespread that most forms of aid which should reach the poor sector of the community either directly or indirectly, although this is not to ignore the fact that those in control of bureaucratic processes will probably take a higher proportion of such aid than is intended.

UK Political and Commercial Consideration

1. The UK has an interest in a stable and non-Communist regime in the area which does not cause problems with her neighbours and generally support us in international fora. The aid programmes which assist the economy should lead to a greater degree of stability for which it is in our interest to engender and quite possibly generate some modest political support on some cases.

?. Domestically the political power structure id dependent upon urban interest in Tacca and larger peasant farmers in the hinterland particularly in the region of

The Army which reflects this position is..... (This paragraph is invented and it is intended to give an idea of the information which could be useful to those seeking to plan and implement aid programmes.)

3. The UK has a few investments in Bangladesh (other than tea) but exports are worth Xmillion per year. The commercial prospects for UK exports in Bangladesh are poor because of the general level of poverty and the difficult balance of payments situation. Nevertheless with increased sources of untied aid from EDF, Arab funds, and IDA, valuable contracts could be obtained if these could be effectively tapped by UK exporters.

Proposals for UK Aid

1. It is proposed that we should seek to increase our aid programme to Bangladesh in real terms provided proposals are put to us which should generate further economic growth.

2. Most of this aid should be directed at improving the economic infrastructure which is essential to the mobilisation of more directly productive resources. Investments in all forms of transport should he encouraged for the provision of power supplies and the assistance with the rehabilitation of industries which have encountered difficulties since Independence. While as much effort as possible should be put into assisting with rural development this requires considerable management inputs from donors and recipients alike. Clearly programmes of population control are critical but other donors are active in this field and scope for our intervention is likely to be very limited. While it should be encouraged,

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