Govt now turns to AIIB for $450m

Bangladesh has sought $450 million from the Asian Infrastructure Investment Bank (AIIB) for this fiscal year to meet the emergency health expenditure and finance the massive stimulus packages the country has unveiled in the face of coronavirus outbreak.

The Economic Relations Division (ERD) has sent a letter to the Beijing-based multilateral lender for $200 million for the health sector and $250 million in budget support.

"Negotiations for the fund have begun. We hope to avail the fund in the current fiscal year," said an ERD official.

The World Bank has approved $100 million for the health sector in Bangladesh to help the country combat the deadly bug. Now, $100 million from the AIIB would be used as co-financing in the project.  

Another $100 million would be used to set up infectious disease hospital at the country's eight divisional cities.

The fund is not enough to build the hospitals, but the government would be able to start the projects with the assistance, the ERD official said.

Finance Minister AHM Mustafa Kamal is also seeking $500 million in budget support from the Beijing-based multilateral lender for the next two fiscal years to help the country slipping into financial ruins from the countrywide pause in economic activities to flatten the curve of the lethal pathogen.

He made the requests while speaking to AIIB President Jin Liqun during a video conference yesterday.

The fund would be used for automation in the agriculture sector, agriculture produce, fruit and vegetable processing, cold-storage, leather processing, poultry and fish sectors.

"We have requested the AIIB to continue its support and assistance to help us ride out the crisis," Kamal said in a press release afterwards. 

He has urged the AIIB to provide another $100 million to rehabilitate micro, small and medium enterprises.

Liqun told Kamal that the AIIB would actively consider the requests and there might be some change to the funding modalities, according to the press release. The ERD would now send formal requests to the AIIB.

The AIIB has doubled available funds under its COVID-19 Crisis Recovery Facility to provide $5 billion to $10 billion due to high client demand.

"The global economy is facing a formidable challenge. The situation is changing with each passing day. If we don't start to think about the economy now while tackling the pandemic, it would not be possible to return the economy to normalcy even in 2021," said Liqun in the press release.

Bangladesh is approaching multilateral development partners to mobilise funds for the stimulus packages it announced in response to the pandemic, which has so far infected 4,186 people in the country and killed 127.

Prime Minister Sheikh Hasina announced a host of stimulus packages amounting Tk 95,619 crore, which is 3.3 per cent of the GDP, aimed at aiding people's purchasing power, widening social safety nets, increasing money supply and making working capital available for the industries, service sector firms and cottage industries.  

Bangladesh has approached the Asian Development Bank for $1.25 billion, $700 million from the International Monetary Fund and $500 million from the Islamic Development Bank.

DJ Pandian, AIIB's vice-president for investment operations, also took part in the video conference.