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MONDAY, MAY 12, 2025
Bangladesh expects over $4.5bn from IDA in next 3 years

Bangladesh

TBS Report
16 January, 2021, 12:25 pm
Last modified: 16 January, 2021, 02:06 pm

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Bangladesh expects over $4.5bn from IDA in next 3 years

The country received $4.5 billion in three years before 2020 under IDA18 programme

TBS Report
16 January, 2021, 12:25 pm
Last modified: 16 January, 2021, 02:06 pm
Bangladesh expects over $4.5bn from IDA in next 3 years

Bangladesh expects to get more than $4.5 billion in assistance from the World Bank's International Development Association (IDA) in the next three years.

The $82-billion IDA19 programme began in June last year, but the Covid-19 pandemic has delayed the finalisation of allocations for eligible countries.

In the three years before 2020, Bangladesh received $4.5 billion under the $75-billion IDA18 programme. Since the latest one has more funds available, Bangladesh hopes to get a bigger slice.

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The Economic Relations Division (ERD) has already sent a letter to the World Bank seeking the fund.

Abdul Baki, additional secretary and wing chief of the ERD, said, "The World Bank has already confirmed verbally about the assistance."

He said although no amount has been specified yet, Bangladesh will get more assistance under IDA19‍ compared to what was available under IDA-18.

Zahid Hussain, former lead economist of the World Bank's Dhaka office, however, said Bangladesh will get less IDA loans because the country's CPIA score has been stuck in and around 3.3 or 3.4 for the last several years.

He further said that the per capita income of the country is increasing every year, as a result of which the chance of getting a large loan will be narrowed.

Bangladesh has been included as an "IDA gap country" on the basis of per capita income.

Considering all this, he thinks, Bangladesh will get around $4.5 billion from IDA19.

The IDA fund is distributed preferring the low-income countries and the allocation is fixed based on the countries' per capita income and their performances on the World Bank's Country Policy and Institutional Assessment (CPIA) report.

The less the per capita income of a country, the more funds it will get from the IDA. More CPIA score also helps a country get more funds.

The credit has a 30-year term, including a five-year grace period, and carries a service charge of 0.75% and an interest rate of 1.25%. Bangladesh is one of 74 countries eligible for the IDA scheme and is grouped among 15 "gap" countries under the "blend" category.

According to the IDA terms, eligibility for IDA support depends first and foremost on a country's relative poverty, defined as GNI per capita below $1,185, a threshold set for 2021. Bangladesh's per capita income is $2,064, official data show.

According to ERD officials, Bangladesh will get the credit to implement different development programmes under IDA-19. The country is going to get $500 million this year to buy Covid-19 vaccine under the IDA19 programme.

The World Bank has also assured Bangladesh of providing another $250 million fund, they said.

Meanwhile, the country has also sought $500 million from the World Bank to recover the economy from pandemic shocks.

Bangladesh will also be able to get loans with a high interest rate from the IDA19 Scale-Up Window (SUW) in the next three years to implement infrastructural development projects including roads and electricity projects. The interest rate for these loans could be up to 3%.

According to the World Bank, the IDA19 SUW is designed to scale up IDA financing to support high quality, transformational, country-specific or regional or both, with a strong development impact.

The resources are in addition to country allocations making them useful where country allocations are insufficient. Under IDA19, the $5.7-billion SUW will continue to provide to the IDA countries more significant financing for high impact development projects.

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Bangladesh / International Development Association (IDA)

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