WB commits $2b more in FY25, Islamic Dev Bank $5b in three years

The interim government on Tuesday (17 September) received financial commitments of significant amounts from the World Bank, Islamic Development Bank (IsDB), and Germany to support key areas of development and reforms in Bangladesh.

The World Bank has pledged to mobilise up to $2 billion in new financing this fiscal year, the IsDB around $4 billion to $5 billion over the next three years, and Germany €1 billion over the next 10 years, including €15 million this year.

The World Bank's Country Director Abdoulaye Seck during a meeting with Chief Adviser Muhammad Yunus on Tuesday, said they are committed to increasing lending to Bangladesh in this fiscal year to help the reform agenda of the interim government.

"We would like to support you as fast as possible and as much as possible," Seck said, adding that the bank would support the critical financial needs of the country.

Illustration: TBS

He said in addition to the new commitments, the multilateral lender would repurpose about an extra $1 billion from its existing programmes in consultation with the government in response to the calls for support by the chief adviser to all development partners of Bangladesh.

Seck said the extra lending would raise the amount of soft loans and grants the World Bank would be giving to Bangladesh this fiscal year to about $3 billion once the funds from the existing projects are repurposed.

The World Bank country chief said the completion of the reforms would be "critically important" for Bangladesh and its young people, including the two million people who are joining the job market every year.

The chief adviser has told the World Bank country head that the Bank must have flexibility to fund Bangladesh's reforms and help restart a new journey after 15 years of "extreme misgovernance."

Budget support from WB this year

Meanwhile, Finance and Commerce Adviser Dr Salehuddin Ahmed on Tuesday said Bangladesh expects budget support from the World Bank within this year, reports BSS.

"Since the World Bank is our largest multilateral development partner, we need special support in the forms of financial assistance and technical assistance from them," he told the media after a meeting with a WB delegation led by its Regional Director Mathew A Verghis. 

When asked whether the government has sought $2 billion afresh from the World Bank, he did not quote any numbers, adding that the issue would be finalised later on.

The World Bank since 1972 extended $42 billion financial support to Bangladesh, including $2.62 billion in FY24. The global lender provided $500 million as budget support last fiscal. Its current commitment is $16 billion for 53 ongoing projects.

IsDB to provide $5b in 3 years

The IsDB on Tuesday announced plans to provide Bangladesh with financial support totaling $4-$5 billion over the next three years under its Member Country Partnership Strategy (MCPS) for 2024-2026. 

This funding will be directed towards key sectors including infrastructure, climate change adaptation, and socio-economic development, reports UNB.

Muhammad Nassis Sulaiman, head of the IsDB Regional Hub, after a meeting with Finance Adviser Salehuddin Ahmed, said their strategy would address critical issues such as infrastructural development and climate change. 

When asked about the possibility of increasing the lending limit for purchasing fuel oil through the International Islamic Trade Finance Corporation (ITFC), a trade financing arm of the IsDB Group, Sulaiman confirmed that this was part of ongoing discussions with the government.

Salehuddin Ahmed said the government has requested support for rebuilding rural roads damaged by the recent devastating floods. He said the IsDB had already conducted a survey in the Sylhet region.

Regarding the financing for fuel oil, the finance adviser mentioned that while discussions were ongoing, any final decision would depend on the outcomes of the IsDB Board meeting scheduled for December. "We've requested funds, and they will assess the possibilities. Until then, nothing is finalised."

Bangladesh Member Country Partnership Strategy (MCPS) (2024-2026), titled "Supporting Sustainable Economic Growth and Resilience" was launched on 29 April 2024. The MCPS provides broad strategic directions and sectoral focuses for IsDB's engagement in Bangladesh.

Germany's €1 billion for renewables 

Adviser to the ministries of Environment, Forest and Climate Change, and Water Resources Syeda Rizwana Hasan on Tuesday said Germany will provide Bangladesh with €1 billion over the next 10 years, including €15 million this year, focusing on renewable energy generation.

Both countries will promote knowledge exchange and cooperation with non-state actors like the private sector, research institutes, academia, and civil society, Rizwana said after her meeting with Achim Tröster, German Ambassador to Bangladesh.

She said the collaboration will also involve ethnic minority communities, women, and youth, fostering a multi-stakeholder approach. 

She thanked the ambassador for Germany's continued support in environmental and climate matters, while Tröster expressed Germany's commitment to supporting Bangladesh in its fight against climate change.

The meeting concluded with a mutual agreement to explore further avenues for collaboration, particularly in technology transfer and environmental sustainability projects.