Bangladesh on way to secure $1b budget support from WB

Only days after securing a whopping $4.5 billion loan from the International Monetary Fund (IMF), Bangladesh is now on path to get another $1 billion in budget support for the current fiscal year from the World Bank (WB).

The loan will come from the International Development Association (IDA), a member of the World Bank Group, to offset the economic fallout from the Russian war in Ukraine and the Covid-19 pandemic, officials of the Economic Relations Division (ERD) confirmed in condition of anonymity. 

Although no official agreement was signed, the budget support was confirmed by the parties during a meeting between Finance Minister AHM Musatafa Kamal, and a Bangladesh visiting team of WB’s Regional Vice President for South Asia Martin Raiser and the bank’s incoming Country Director for Bangladesh and Bhutan, Abdoulaye Seck at the Secretariat Sunday. The delegation is currently on a three-day visit to Bangladesh.

According to ERD officials, the budget support will be disbursed in two phases, of which $250 million will be released in February and $750 million in several instalments over the span of two years.

The $1 billion WB loan will have to be repaid within 30 years, with a grace period of five years, said the officials, adding that the interest rate for the loan will be 2 per cent. 

Speaking after the meeting, Finance Minister Mustafa Kamal said between 2019 to April 2022, we received $1 billion in budget support from the WB.

He said “We are expecting to get $500 million in budget support in current fiscal year.”

He also said “Bangladesh will get $500 million under the DPC of Green, Resilience, Inclusive Development (GRID), with $250 million each over the next two years.”

Besides, a loan proposal of $6.15 billion is in the pipeline for the period 2023-2025.

In addition, the WB is working on a Technical Assistance project called “Beautification of Dhaka” to ensure environmental restoration and navigability of the rivers around the city.”

Finance minister also welcomed an initiative by the IDA 20 cycle, a global coalition of development partners, to help low-income countries with a $93 billion financing package scheduled for July 2022 to June 2025 to tackle the economic crisis caused by the Covid-19 and for building a greener, more resilient, and inclusive future.

He requested increased assistance from the Concessional IDA Fund for Bangladesh to recover the economy from adverse situations arising from Covid and Ukraine-Russia war.

He said Bangladesh has received $37 billion in loans and grants since 1972 for our development activities from the WB, of which $26.6 billion has been released.

“We have paid $6.36 billion in interest and principal so far. Besides, the World Bank is preparing a Country Partnership Framework (CPF) for the fiscal year 2023-2027.”

Among others, Finance Division Senior Secretary Fatima Yasmin and Economic Relations Division Secretary Sharifa Khan, WB’s Regional Director for Infrastructure in the South Asia Region Guangze Chen, Acting Director of Bangladesh and Bhutan Dandan Chen were also present at Sunday’s meeting at the secretariat.

The delegation  earlier held a separate meeting with the Economic Relations Division on loan related matters.