The World Bank is set to provide $750 million as budget support for three years after a gap of ten years, which is the largest amount yet for Bangladesh from the Washington-based multilateral lender.
The loan will be given in three instalments of $250 million each to help the government strengthen its capacity to create more, better-paid and quality jobs. The first instalment was approved yesterday by the WB board.
“Bangladesh has made remarkable progress in accelerating growth and reducing poverty, but the rate of job creation has not kept up with economic growth,” said Qimiao Fan, WB's country director for Bangladesh, Bhutan and Nepal.
Creating more and better jobs is a prerequisite for the country to achieve its vision of upper-middle income status, he added.
Finance Minister AMA Muhith, in an impromptu press conference at his secretariat office called upon receiving the news of the loan's approval by the WB board, acknowledged that job creation in recent times was not in tandem with economic growth.
The government will take various steps in future for job creation. This is the largest loan for Bangladesh in the WB's history, according to the outgoing finance minister.
“This is an expression of the World Bank's support to the policies undertaken by the government in recent times,” said Abdur Rouf Talukder, finance secretary, at the press briefing.
Over the next three years the government will implement more reform programmes, he added.
“Despite Bangladesh's robust economic growth, the pace of job creation has slowed in recent years, and almost stalled in the readymade garments sector,” said the WB in a statement.
The growth rate for jobs fell to 1.8 percent in 2010-16 from 2.7 percent in 2003-10. Women, workers in lagging regions, and youth in particular face challenges in accessing quality jobs.
Climate change has exacerbated this jobs challenge, underscoring the need to significantly increase employment in the non-agriculture sector.
The credit aims at supporting Bangladesh develop a stronger policy and institutional framework to address barriers to creating more and better jobs for citizens, including women, youth and the vulnerable population.
“It will help develop market-oriented skills for women, youth and overseas migrants, preparing them for better employment opportunities,” said Thomas Farole, WB lead economist and task team leader.
To promote large-scale employment in diverse manufacturing sectors, the reform programme will help improve the investment environment, lift barriers to doing business and modernise customs and trade facilitation.
The programme will also help implement amendments to the labour law and reform the pensions programme to ensure works are protected, the WB said.
The rate of interest on the loan is two percent, according to Muhith.
The repayment period is 30 years including a five-year grace period, according to the WB statement.
“It is a good thing,” said AB Mirza Azizul Islam, a former advisor to a caretaker government, who was in charge of the finance ministry when Bangladesh last got budget support from the WB back in 2008.
But, such loans come with some conditions that may go against the country's interest, he added.
BASIC BANK FORMER CHAIRMAN, CPD ISSUE
Also at the press briefing reporters quizzed Muhith about Abdul Hye Bacchu, former chairman of BASIC Bank.
“I don't know what Bachhu does or how he is living. I don't know. He has totally disappeared from my horizon and I am happy about it. He is a cheat and thief. He is an out-and-out cheat and dishonest. That's all.”
On the recent report by the Centre for Policy Dialogue that said major scams in the banking sector in the past decade cost Tk 22,502 crore, Muhith said, “What CPD said about the banking sector is an old problem.”
The issues are always in discussion.
“Timing is a factor here. It seems they have a political move behind publishing such a report at such a time.” However, the report contains some good suggestions, such as merging of bad banks with others, he said, adding that he will leave a recommendation for the incoming government.