Photo : Collected
The new interim government has sought budgetary support from the World Bank within a month of ascending to power. Last week, a letter was written to the World Bank asking for a new budget support of about 1 billion dollars. This money will mainly be spent on the energy sector. The Economic Relations Department (ERD) has sought this amount in two installments of $500 million.
According to a responsible source of ERD, a World Bank team is coming to Dhaka from the head office of the organization in Washington next week to discuss the budget support. However, the group will discuss various aspects of the economy.
When asked about this, it was stated by the World Bank's Dhaka office that next week a high-level mission of the World Bank will start discussions to determine the priorities of the reforms, including possible budget support. It is known that even if the government wants a budget support of 100 million dollars, the amount that will be available will depend on the negotiations. There are various conditions in such a bargain. If these conditions are met, the money will match. By and large, the conditions are almost the same in multinational corporations. One of the conditions is to reform the financial sector including the revenue-banking sector, legal reforms to establish good governance, reduce subsidies, and make major reforms in various sectors.
Earlier, in November 2023, the Bangladesh government had proposed to the World Bank for another budget assistance of 500 million dollars. No final decision has been made regarding that budget support.
Meanwhile, the Asian Development Bank (ADB) is negotiating with USD 400 million for employment in vulnerable population areas. This budget support from ADB will automatically match $200 million from the Asian Infrastructure Investment Bank (AIIB) and $100 million from Korea.
There has been pressure on foreign exchange reserves in the country for two years. Reserves are running low. For this, the government is interested in receiving budgetary support. For one-and-a-half years, the main sources of dollar receipts are export earnings, expatriate earnings and foreign loans for projects, as well as the Ministry of Finance, which is more focused on getting budgetary support. In addition, International Monetary Fund (IMF) loans were taken to shore up the dwindling reserves. However, in one year the reserve has decreased by 1000 million dollars.
In the last 5 years, more than 8 billion dollars of budget support has been received from various lenders including ADB, World Bank.
According to the updated estimates of the Ministry of Finance, a total of 175 crores of budget assistance has come in the last financial year 2023-24. However, the maximum budget assistance of $2.6 billion came in the fiscal year 2021-22. Apart from this, 100 million dollars in 2019-20 fiscal year, 109 million dollars in 2020-21 fiscal year and 177 million dollars in 2022-23 fiscal year.
Messenger/Fameema
