In an uncharacteristic gesture of goodwill, the Asian Infrastructure Investment Bank (AIIB) yesterday approved $250 million in loans as budget support to Bangladesh to cope with the economic impact of the global coronavirus pandemic.
Unlike the other multilateral lenders, the Beijing-based AIIB typically lends to nations in the Indo-Pacific region on building infrastructure regardless of the state of development.
Bangladesh has in recent years performed exceedingly well with annual growth averaging 7.4 per cent over the last five years, said DJ Pandian, vice-president for investment operations at the AIIB.
"It is incumbent on the international community to come together to ensure that the country does not fall behind but continues to make strides in its development efforts," he added.
The coronavirus pandemic will drive an additional 13 million people into poverty, cut 3.7 million jobs, take budget deficit to as high as 7.5 per cent and inflict a minimum revenue loss of 2 per cent of GDP in Bangladesh, warned the Asian Development Bank recently.
Bangladesh is extremely vulnerable to the highly contagious virus given that it has one of the highest population densities in the world, the AIIB said in a statement yesterday.
Nearly 15 per cent of the households continue to live in poverty, with a high share of households living in informal settlements, and more than 80 per cent of the workforce employed in the informal sector, all of which make it difficult and expensive to maintain social-distancing measures to contain the spread of the virus.
The loan, which is being co-financed with the Asian Development Bank (ADB), is aimed at mitigating the adverse effects of the pandemic on the country's poor and most vulnerable, particularly those affected by job losses in small and medium enterprises and the informal sector, as well as strengthen social safety nets.
By March 2021, 15 million poor and vulnerable people, of whom at least 40 per cent are women, will benefit from at least one economic assistance programme, such that national poverty incidence will be maintained at the 2019 level of 20.5 per cent by June 2022.
At least Tk 17,000 crore, or $2 billion, in loans with subsidised interest will be provided to the affected industries and sectors and micro, small, and medium-sized enterprises by December 2021.
The programme also has specific targets to support at least 1.5 million workers, of whom at least half are women, in export-oriented industries by way of providing extended salary support.
While the AIIB does not have a regular instrument for policy-based financing, it is extending such financings on an exceptional basis under the COVID-19 Crisis Recovery Facility to support its members on projects co-financed with the World Bank or the ADB.
AIIB's Covid-19 Crisis Recovery Facility, created as part of the coordinated international response to counter the crisis, has an initial size of $5 billion to $10 billion to support the members' urgent economic, financial and public health pressures and quick recovery from the crisis.
The $250 million assistance from the AIIB is part of the Bangladesh Covid-19 Active Response and Expenditure Support Programme.
The Beijing-headquartered multilateral lender is currently reviewing projects from a number of members, the statement said.