World Bank to provide $250m budget support

Staff Correspondent

21st June, 2020 06:10:14 printer

World Bank to provide $250m budget support

The World Bank will provide US $250 million credit as budget support to Bangladesh that will help the government to narrow the budget deficit.

A loan agreement was signed on Sunday in Dhaka between the Bangladesh government and the World Bank at a function at Economic Relations Division (ERD), an ERD release said.  

The fund from the lender’s concessional credit arm International Development Association (IDA) is to finance ‘Second Jobs Development Policy Credit (DPC-2)’ programme.

This fund will be utilised for emergency health related services and for implementing stimulus packages announced by Prime Minister Sheikh Hasina, ERD officials said.

ERD Secretary Fatima Yasmin and the WB Country Director Mercy Tembon signed the loan agreement on behalf of their respective sides.

The  Government in recent years has laid emphasis on reform and modernisation of some policy strategies, regulations with the involvement of various ministries, divisions and government agencies to support extended job creation, improved job quality, and inclusive access to jobs for all the Bangladeshi nationals.

In this context, the government and the World Bank Group have got engaged in a three-year reform programme for the 2018-2021 period and the WB agreed to extend financial assistance of $750 million in this regard.

The first programme in the series (Job DPC-1) was completed in FY2018-19 where IDA provided $250 million and in its continuity, has agreed to provide another $250 million in the second programme (Job DPC-2) in the current FY 2019-20.

The credit amount to be repaid in 30 years (with 5 years grace period) will have an interest-rate of 1.25 percent along with 0.75 percent service charge on the outstanding amount.

Under Job DPC Program the government agreed to revise and update some existing legislation and rules, reengineering business processes that eventually contribute to Bangladesh’s improvement on ease of doing business index, ERD officials informed.  

Improved ease of doing business ranking will facilitate attracting new investment and thus create employment opportunities, they added.  

This DPC tranche-2 was due to be released in FY 2020-2021.  In order to address the adverse impacts of COVID-19,  the  World  Bank  (IDA)  agreed to front-load this disbursement in  FY  2019-2020  on request of the government of Bangladesh.