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The Ministry of Finance has recently asked Local Government Division to take necessary steps to introduce a unified budget form like Budget & Accounting Classification System (BACS) in all the city corporations of the country.
Sources in the finance ministry said Japan International Cooperation Agency (JICA) has shown interest to provide budget support under the development policy loan for strengthening public financial management on the condition that unified budget form will have to be introduced in all the city corporations of the country.
The Asian Development Bank (ADB) has provided Bangladesh with $500 million in budget support for a project titled ‘Sustainable Economic Recovery Programme’. Meanwhile, $500 million has been disbursed for subprogram-1 while the work on subprogram-2 is going on.
Finance ministry sources also said as other development partners have the scope of co-financing the project, JICA has shown interest to provide loan in this context.
It is learnt that the government will have to take policy action to get loan from JICA. As part of it, a unified budget form has been prepared for all the city corporations of the country like Budget & Accounting Classification System (BACS) through a project ‘strengthening capacity for city corporations’.
The Ministry of Finance has sent the unified budget form to Local Government Division so that it is possible for the government to get loan from JICA. This is why the finance ministry has asked Local Government Division to take necessary steps to introduce Budget & Accounting Classification System (BACS) in all the city corporations of the country.
The Economic Relations Division (ERD) starts negotiations with foreign donor agencies for quick disbursement of their assured budget support to Bangladesh this fiscal year.
Bangladesh expected around $1-1.5 billion in budget support from international lenders, especially the World Bank, the Asian Development Bank, Asian Infrastructure Investment Bank (AIIB), and other donor agencies this fiscal year.
AIIB responded to the call of Bangladesh to provide budget support to tackle ongoing economic crisis. Already they signed agreement with ERD to provide $250 million budget support while Bangladesh expects $500 million. Besides, $250 million will come after being approved by the AIIB board.
However, ADB assured Bangladesh of providing $500 million in budget support while WB will give $500 million for different development projects and technical assistance programmes.
In the last three financial years, Bangladesh received $800 million from AIIB as budget support to combat Covid, to finance government-declared stimulus packages and to strengthen the post-pandemic economy. After signing the loan agreement with AIIB, now the budget support stands $1050 million.
AIIB started its journey in 2016 and in last 5 years, AIIB’s investment in Bangladesh is $2.79 billion.
The loan will be received in standard terms and conditions of AIIB. The repayment period of the loan is 26.5 years including three years grace period.
Officials of ERD said they will start next spell of negotiation with ADB, JICA and WB about the terms and conditions to secure the budget support.
Officials also said the World Bank would provide $500 million and Japan International Cooperation Agency is likely to provide $500 million as budget support to Bangladesh. If the expected budget support comes, the government will get some relief.
