Govt eyes $2.5b from WB

Bangladesh may seek more than $2.5 billion from World Bank in budgetary support, project financing and aid as it has to implement a major portion of the country's gigantic stimulus package to revive the economy.

Its main target would be to secure $500 million in budget support in the current fiscal year.

Of the sum, $250 million would be sought in the form of development support credit and another $250 million from the development lender's fund for the poorest countries to combat the impacts of the coronavirus pandemic. 

The Washington-based lender has indicated that it would provide $1.87 billion in the current fiscal year from its International Development Association (IDA), which lends to the poor countries.

It has already approved loans worth $402 million in the FY21, said an official of the WB's Dhaka office yesterday.

The government is also pursuing $400 million from the WB's scale-up facility, which provides loans at non-concessional terms. The lender indicated that it may give $200 million in FY21 under the facility, said an official of the finance ministry.

Combined, the government would want $2.52 billion from its long-time development partner.

The WB approved $2.27 billion in the just-concluded fiscal year. Of the sum, $1.7 billion came after March, extending much-needed support to the country reeling from the pandemic.

The financing issue would be discussed during Finance Minister AHM Mustafa Kamal's annual meetings with senior WB officials, now to be held virtually, starting October 12, said the finance ministry official.  

The WB has decided to deploy up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery.

This includes $50 billion of new IDA resources through grants and highly concessional loans.

Bangladesh would need more funds in fiscal 2020-21 since this would be the period when a majority of the Tk 113,117 crore stimulus funds formed to revive the economy would be implemented.

Rising expenditure and slower revenue generation are prompting the government to seek outside help.

Revenue collection rebounded in August after remaining downbeat for four months since April, thanks to recovery in business and economic activities that buoyed overall receipts.

In August, taxmen collected Tk 15,406 crore, a rise by 7.85 per cent from the same month a year ago.

Despite August's recovery, overall collection was nearly the same when comparing the July-August period year-on-year, provisional data from the National Board of Revenue showed.

So, apart from availing regular project financing from the WB, the government would emphasise securing budget support, the finance ministry official said. 

The government has undertaken a programme worth $550 million to procure and distribute coronavirus vaccines.

It is currently in negotiation with the WB and Asian Infrastructure Investment Bank for a loan of $400 million for the programme. The rest of the amount would be contributed by the government.

On September 29, World Bank President David Malpass said he was seeking board approval for a $12 billion coronavirus vaccine financing plan to help poor and developing countries secure sufficient stocks once the solution was available in the coming months.

He said the board was expected to consider the plan in early October.

The initiative is part of a $160 billion coronavirus aid finance pledged by the multilateral lender.

It aims at helping countries procure and distribute vaccines early to healthcare and other essential workers and expand global production.