WB, ADB to provide $1.4b budget support to Bangladesh by June
Preparations are underway to finalise the budget support deals following green signals from the IMF, ERD officials say
Bangladesh is set to receive $1.4 billion in budget support from the World Bank and the Asian Development Bank (ADB) for the current fiscal year.
According to officials from the Economic Relations Division (ERD), agreements for these loans are expected to be signed by June, and both development partners have already confirmed the support.
The budget assistance had been stalled due to uncertainty surrounding the release of the 4th and 5th tranches of the International Monetary Fund's (IMF) $4.7 billion loan. However, following renewed optimism about the IMF disbursements in June, negotiations with the WB and ADB have resumed.
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ERD officials noted that preparations are underway to finalise the budget support deals following green signals from the IMF.
Yesterday, a negotiation meeting was held at ERD for a $500 million loan under the "Resilience and Recovery Development Policy Credit-II" programme with participation from ERD, Finance Division, and WB representatives.
Earlier on Tuesday, two separate negotiation meetings were held with the ADB. As a result, Bangladesh secured commitments for $500 million under the "Banking Sector Reforms Subprogram 1" and another $400 million under the "Climate Responsive Inclusive Development Program (CRID) - Subprogram 2."
Wishing anonymity, a senior ERD official told The Business Standard, "Multilateral agencies typically seek the IMF's input before approving any loan, as the IMF prepares diagnostic reports outlining the macroeconomic conditions of its member countries. These reports include assessments of a country's external debt situation and its repayment capacity.
"Development partners like the WB and others take these IMF debt reports into serious consideration when deciding on loan approvals. In essence, without the IMF's consent, multilateral development partners usually do not extend loans," he added.
The official further said although this requirement does not formally apply to bilateral development partners, countries like Japan also tend to follow this practice.
So far in the current fiscal year, Bangladesh has received $1.2 billion in budget support.
This includes $500 million from the WB under the "Second Bangladesh Green and Climate Resilient Development Policy Credit" signed in December 2024, $600 million from the ADB in May under the "Strengthening Economic Management and Governance (Sub-Program-1)," and $100 million from the OPEC Fund in April under the same governance programme.
According to ERD estimates, Bangladesh is set to receive a total of $2.6 billion in budget support in the current fiscal year — the highest ever in a single year. The previous record was $2.59 billion in FY2021-22.
Other budget support in discussion
ERD officials also mentioned that a $500 million programme titled "Strengthening Governance and Institutional Resilience" is currently under negotiation and may be finalised in the next fiscal year.
Additionally, discussions are ongoing with Japan for a $418 million Development Policy Loan aimed at economic reform and climate change resilience.
Another $300 million from the Asian Infrastructure Investment Bank (AIIB) is also under discussion under the "Climate Resilient Inclusive Development Program (Subprogram-2)."
