ADB signs $744m recovery fund
The Asian Development Bank (ADB) signed four agreements yesterday to lend Bangladesh $744 million to help fight off the effects of global recession.
Of the total allocation, a $500 million loan under the countercyclical support facility (CSF) will support the government's efforts to mitigate the worst effects of the global economic crisis, ADB said in a statement.
Three other loans of $244 million under the public expenditure support facility (PESF) will support government measures to introduce economic and social policy reforms.
ADB emphasises that the reforms are essential to achieve higher and more inclusive long-term growth and strengthen social safety net programmes.
M Musharraf Hossain Bhuiyan, secretary of Economic Relations Division (ERD), and Paul J Heytens, ADB's country director for Bangladesh, signed the agreements at a ceremony at ERD in Dhaka.
"The CSF loan will help the government to stimulate economic recovery and move ahead with its social safety net programmes to cushion the impact of the crisis on the poor and vulnerable while maintaining macroeconomic stability," said Heytens.
"The PESF is equally vital to help the government deliver key public policy reforms," he said.
Sound economic management has enabled Bangladesh to weather major external shocks and sustain its growth momentum, even if it has not been spared from the adverse effects of rising petroleum and commodity prices, and natural disasters such as floods and cyclones, ADB said.
The loans came after a visit to Bangladesh in July by ADB President Haruhiko Kuroda, where he offered to provide additional ADB assistance to the government.
The CSF, established in June 2009, supports ADB's developing member countries needing to increase fiscal spending to counter the global economic crisis.
To be eligible to access the CSF, the countries must be adversely affected by the global economic crisis, demonstrate sound macroeconomic policies and have a countercyclical programme in place.
The CSF loan has a five-year repayment term, with a three-year grace period, and will cost around 200 basis points over ADB's financing cost and pricing. As the loan will be disbursed in a single trance, it will not involve any commitment fee.
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