Govt to negotiate $1.5b budget support with donors

The Economic Relations Division (ERD) will start negotiation with foreign donor agencies for quick disbursement of their assured budget support to Bangladesh in this fiscal year.

“We will start the next spell of negotiation with the development partners soon for materialising the budget support for this fiscal year,” he also said.

“For quick disbursement of the fund, we are communicating with our prime donors who have promised to provide budget support to our country,” a senior ERD official told The Business Post.

Only six months left to end this fiscal year, we are expecting to materialise the budget support from the international lenders, he added.

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 in this fiscal year.

“Only 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,” he also said. The next $250 million will come after being approved by AIIB board, he also said.

However, ERD officials said ADB assured to provide $500 million budget support while WB to give $500 million to the country in 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.

Seeking anonymity, an official told The Business Post that budget support is being sought as the government wants to increase its cash assistance to tackle the ongoing economic crisis. If the expected budget support comes, the government will get some relief.