$250m budget support from WB likely in April

The World Bank (WB) is likely to provide the first instalment of $250 million in budgetary support in April under the Green, Resilient Inclusive Development (GRID) programme.

“We recently requested the World Bank to disburse $500 million in budget support during the ongoing fiscal year to mitigate the budget deficit. The lender hinted that they would do that at a recent meeting,” a senior official of the Economic Relations Division (ERD) told The Business Post on Thursday.

The official said the global lender had pledged earlier to provide $750 million as budget support to Bangladesh under a new scheme. It will come in three instalments and two of them will provide $500 million in FY2022-23.

“The three instalments were supposed to come in three years. But we urged WB to provide $500 million in two instalments under the GRID programme during FY23. The first tranche will likely come in April,” the official said.

The remaining $250 million in the third instalment will be provided in the next fiscal year, the official added.

The government has taken up a Tk 678,064 crore national budget for FY23 with an overall deficit of Tk 245,064 crore, or 5.5 per cent of the GDP.

Meanwhile, the World Bank will not provide the pending second instalment of $250 million under the Development Policy Credit (DPC) scheme as Bangladesh has failed to fulfil the conditions, ERD officials said.

The government is yet to meet all the conditions for DPC even though the first $250-million instalment, from the assured $750 million programme, was released in FY2021-22. That is why WB will not send the second tranche.

If the government meets all terms and conditions regarding structural and financial-sector reforms,

WB will consider releasing the remaining $500 million from the DPC scheme in two instalments, the officials added.

The interest rate for both types of credits from WB is 1.25 per cent and the service charge is 0.75 per cent. These loans will have to be repaid in 30 years. There is, however, a grace period of five years.