Govt seeks more cheap WB loans
Yesterday the government requested more concessional loans from the World Bank, despite being the largest recipient of such funding, as well as increased budget support as it seeks to shed the effects of the pandemic and the war in Ukraine.
The call came during the meeting of Finance Minister AHM Mustafa Kamal with Martin Raiser, World Bank Vice President for South Asia Region, and Abduoulaye Seck, the new Country Director for Bangladesh and the Bhutan.
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During IDA20, the World Bank Group’s ongoing round of concessional lending to the world’s 74 poorest countries, Bangladesh would receive $6.15 billion, up 29.5% from IDA19.
This is 6.5% of the $93 billion pot raised for the three-year loan program starting in July 2022 and ending in June 2025, which is the highest allocation for a single country.
And yet the government is seeking a bigger slice of the pie as well as more fiscal support, according to people briefed on the content of WB delegation meetings throughout the day.
Earlier in the day, Raiser met with the Economic Relations Divisions, where he was briefed on the impacts of the war in Ukraine on Bangladesh’s economy.
Due to the war, prices for 6-7 items skyrocketed, meaning an additional $820 million had to be spent on imports, ERD officials told the World Bank delegation.
Subsequently, the government requested additional budget support of $1 billion in early June.
During this fiscal year, Bangladesh is expected to receive $500 million from the World Bank in budget support, said a press release from the Ministry of Finance. The same amount is expected for the next fiscal year.
In exchange for the funds, the Washington-based multilateral lender has proposed 12 reform actions regarding the economy and mitigating the effects of climate change.
The government has yet to fulfill any of the conditions, which include fiscal policy and financial sector reforms and the establishment of safeguards against future shocks.
In response to Kamal’s request, the World Bank delegation said that more funds would be made available as soon as Bangladesh starts implementing the stipulated reforms.
Prior actions are required to get these funds released as they are not tied to any infrastructure project.
Kamal told Raiser that the reforms are in various stages of implementation.
Between 2019 and April this year, the World Bank provided $1 billion in budget support, according to the Finance Ministry press release.
Also at yesterday’s meeting, Kamal called on the World Bank to synchronize its Country Partnership Framework for the fiscal years 2022-23 to 2026-27 with the 8th Five-Year Plan, Vision Plan and Delta Plan and other government master plans, sector plans and policies such as Bangladesh. can achieve its goal of becoming a developed country by 2041.
Kamal also thanked WB for providing technical assistance for a project named “Dhaka Beautification” involving restoration of rivers around Dhaka city and improvement of their navigability of rivers around Dhaka city and the Dhaka beauty enhancement.
In addition, he also discussed the progress of various projects being implemented with loans from the World Bank.