AIIB likely to lend $250m budget support

The Asian Infrastructure Investment Bank (AIIB) is likely to provide $250 million to Bangladesh as budget support to overcome the economic crisis.

“We hope that AIIB will provide $250 million in budget support this month as we are negotiating with them continuously. We have requested them to provide their promised budget support by this fiscal,” a senior official of the Economic Relations Division (ERD) told The Business Post.

“Only AIIB responded to the call of Bangladesh to provide budget support to tackle the ongoing economic crisis. Already they signed an 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 the AIIB board, he said.

Earlier, AIIB in December last year signed a loan agreement with Bangladesh for giving $250 million in budget support to tackle the ongoing economic crisis.

The budget support will be used Strengthening Social Resilience Program (Sub Programme 2). The Finance Division has taken the programme.

The principal objective of the program is to improve the inclusiveness and responsiveness of social development in Bangladesh.

The programme aims to improve the coverage and efficiency of social protection, financial inclusion of disadvantaged people and strengthening responses to lifecycle social and health needs.

AIIB started its journey in 2016 and in the last 05 years, it invested $2.79 billion in Bangladesh.

In the last three financial years, Bangladesh received $800 million from AIIB as Budget Support to combat Covid, make government-declared stimulus packages and strengthen the post-Covid economy. After signing the loan agreement, now the budget support stands at $1050 million.

The loan will be received in the standard terms and conditions of AIIB. The repayment period of the loan is 26.5 years including 3 years grace period.

Meanwhile, Bangladesh expects $1.5 billion in budget support from different donors including World Bank, Asian Development Bank, Japan International Cooperation Agency (JICA) and AIIB.

The ERD is now negotiating with donors about the terms and conditions to secure budget support.