The jute industry in Bangladesh, which has experienced continued losses since 1972, is in financial crisis. Denationalization in 1983 widened the gap between the cost of production and sale price. A World Bank study indentified some of the sources of the crisis, which include a decrease in demand, competition from manmade fibers, poor government policies, and structural problems within the sector. To solve these problems, the study proposed such strategies as downsizing, deregulation, and market mechanisms that promote financial responsibility. Within the sector, capacity reduction, debt restructuring, the elimination of export subsides, and exchange rate rationalization are necessary. Improvements in government policy include privatization, the replacement of the mandatory credit system with a market based system, and the replacement of centralized wages with decentralized wages linked to productivity and profit.