Donors to give $3.3b in vaccine purchase, budget support

Donors have promised to provide as much as $3.30 billion on the heads of budget support and vaccine purchase in the current 2021-2022 fiscal year.

The estimated amount is in addition to Tk88,024 crore earmarked in the budget for the current fiscal year as project aid from donor agencies, top officials at the Economic Relations Division (ERD) under the finance ministry said.

Of the amount, Asian Development Bank (ADB) is going to disburse $1.41 billion. Of it, the Bank approved a loan package of $940 million on June 22 for purchasing safe and effective vaccines.

The amount will be disbursed by September, hoped ERD officials. A loan agreement between the ERD and the ADB was signed on June 24 in Dhaka.

With the fund, the government will purchase jabs through the Covid-19 Vaccines Global Access (COVAX)programme, the United Nations Children’s Fund (UNICEF) or bilateral arrangements with vaccine manufacturers or distributors, a media release of the ADB said.

The rest $500 million will come in budget support as agreement for half of the loan has already been signed between the ADB and the ERD.

The loan signing for the remaining $250 million will take place in September.

“We are hopeful of receiving over $3 billion from different multilateral and donor agencies, with the ADB being the highest lender for jabs purchase and supporting budget,” Pear Mohammad, additional secretary of the ERD, told The Business Post.

“Donors are with us on fighting Covid-19 and supporting the economy affected due to the raging impact of the virus.”

The World Bank (WB)has promised to provide $550 million in budget support for the current fiscal year. The loan negotiation is in the final stage and the finance officials are expecting to sign the deal in September to get the low-cost finance by this fiscal year, officials confirmed.

Asian Infrastructure Investment Bank (AIIB) has pledged to provide $500 million in budget support. The loan deal is likely to be signed sometime in September. The ERD officials said the amount from the AIIB could increase to as high as $700 million.

“We are sure of getting $500 million from the AIIB. But the government is trying to enhance the amount to $700 million,” a senior ERD official said.

“I am hopeful as the AIIB is keen to stay beside Bangladesh in our trying time of Covid emergency.”

The JICA (Japan International Cooperation Agency) has promised to lend $300 million in budget support as loan negotiation with the agency ended last month. The loan signing is going to take place at end of this month, it was learnt.

European Investment Bank (EIB) has promised to lend another $300 million in the current fiscal year for vaccination purpose. The loan agreement is going to be signed in September, sources said.

Besides, South Korea (Korean Exim Bank) will provide $100 million, while AFD will lend $200 million in budget support.

Loan agreements with the agencies are expected to be signed in August and September respectively.

Budget support is a particular way of giving international development aid, also known as an aid instrument or aid modality. With budget support, money is given directly to a recipient country government, usually from a donor government. Budget support differs from other types of aid modalities like balance of payment support and project aid.

In practice, budget support varies dramatically and is done in a large range of different ways. One of the broadest distinctions is between general budget support and sector budget support.

Officials at the finance ministry said donors prefer cash transfer to those badly affected by the deadly virus.

“Besides, we can use the fund for both development and revenue expenditure,” a top finance official said.

“No condition attached this time against loan due to Covid-19 emergency.”

Another finance official, asking not to be named, said they are planning to earmark around Tk14,500 crore from the donor fund on purchasing jabs for 12 crore population.

“Each jab could cost around $8.50,” said the official.

Besides, responding to donors’ priority, the finance ministry is assessing the Covid-19 impact on women and other vulnerable segments of the country.

A fresh round of government handout is likely to be disbursed, another official said, adding that women will be given a priority.

Ahsan H Mansur, executive director of the Policy Research Institute, said the donors had been generous towards extending fiscal support to fight coronavirus and overcome budgetary resource constraints.

“The government should be pro-active towards lending their hands towards corona-affected marginalized groups in the country, while vaccine purchase should be transparent so that resource is spent in just ways,” Mansur told The Business Post.