$2b budget support from ADB this fiscal
The Asian Development Bank is likely to mobilise about $2 billion in budget support for Bangladesh this year after the country sought financial assistance to weather the global economic uncertainty brought on by the Ukraine war.
The development was conveyed to Finance Minister AHM Mustafa Kamal during the Manila-based multilateral lender's 55th annual meeting, The Daily Star has learnt from officials familiar with the discussions.
Of the $2 billion, about $500 million would come in a co-financing arrangement with the Asian Infrastructure Investment Bank.
Bangladesh is expected to get a handsome amount from the $14 billion package announced by ADB yesterday to ease a worsening food crisis in Asia and the Pacific and improve long-term food security in the region.
Climate change and the Russian invasion of Ukraine, which disrupted supplies of food staples and fertiliser, are threatening food security in Asia and the Pacific.
Disbursements from the package will begin this year and run until 2025, the lender said in a press release.
The amount that Bangladesh will get from the package would be finalised through discussions later on, said an ADB official preferring not to be named.
On the sideline of the annual event, Kamal had a meeting with ADB President Masatsugu Asakawa, where he sought budget support and policy-based lending to ensure social and economic resilience.
Budget support is being sought as the government wants to ramp up its cash assistance to the poor to mitigate the effects of inflation brought on by the pandemic and the current geopolitical crisis that has left food, energy and fertiliser prices soaring, said a finance ministry official on the condition of anonymity.
Policy-based lending is being sought as project loans sometimes get delayed and the funds go back. If policy-based lending is in place, then assistance can be provided to the poor and the vulnerable for economic shocks, the official added.
"We strongly hope that ADB can play a dynamic role in helping vulnerable people in Asia and the Pacific region, especially Bangladesh in climate adaptation, mitigation and disaster risk reduction. I believe that flexible credit support rather than blended finance would be a realistic approach to addressing climate change vulnerability," Kamal told Asakawa at the meeting.
ADB can also extend its generous support to ICT-based entrepreneurship development, agricultural diversification, sustainable health and education with a special focus on the Fourth Industrial Revolution.
"It is of utmost importance that the Bangladesh-ADB Country Partnership Strategy (2021-2025) is aligned with Bangladesh's national development and goals," Kamal told the ADB president.
The Manila-based lender is expected to provide Bangladesh with $12-15 billion over the next five years.
"ADB's continued support is crucial for Bangladesh in achieving our development milestones."
So far, ADB has provided Bangladesh with $27.6 billion, of which $11.69 billion remains outstanding, the press release said.
"Bangladesh continues to service its debt regularly with great capacity. In its 51-year journey, Bangladesh has never failed to repay domestic and foreign debts," Kamal said, adding that the country has one of the lowest debt-to-GDP ratios in the world at just 34 percent.
At the meeting, Kamal went on to request for appointment of senior officials, especially of vice-president-level, at the ADB's office in Dhaka in light of the expanding portfolio.
Bangladesh is ADB's third-biggest portfolio.
Also at the meeting, Kamal thanked ADB for its swift and decisive response to the pandemic, which helped countries across Asia and the Pacific procure vaccines quickly.
ADB provided Bangladesh with $2.53 billion during the pandemic, with $940 million going towards vaccine purchases.