The government is expecting $500 million in budgetary support from the World Bank (WB) within the current fiscal year of FY 2023-24 to help alleviate the budget deficit.
Officials say the Washington-based multilateral lender is likely to confirm allocations of $250 million each from two separate facilities: one from the climate change fund and another from the regular International Development Association (IDA) fund.
"We anticipate at least $500 million in budget support from the World Bank by June," said a senior official at the Ministry of Finance.
According to the official, discussions are ongoing with the WB to secure confirmation of the support, which aims to bolster Bangladesh's foreign exchange reserves and minimise the budget gap in FY24.
Previously, Bangladesh requested $1 billion in budget support from the WB to navigate the current foreign exchange crisis and reduce the budget deficit.
A Bangladesh delegation led by the Finance Minister Abul Hassan Mahmood Ali met with the World Bank's South Asia Region Director in Washington D.C. during the IMF-WB Spring Meetings and reiterated their request for expedited confirmation of the funds, according to finance ministry and Economic Relations Division officials.
"We had good meetings with the World Bank delegations," said another finance ministry official. "We are currently working on fulfilling the policy matrix provided by the WB. As per the matrix, Bangladesh has done well in various areas. So, we are hopeful of securing the loan by June."
"We are preparing to sign the loan agreement with the Washington-based lender in June," he added, "so that we can inject the money directly into the national budget for its necessary expenditures."
According to finance ministry and Economic Relations Division officials, the WB has already signalled its approval to provide $250 million in budget support -- one from its climate change fund and another $250 million under the Second Recovery and Resilience Development Policy.
Due to the impact of the Russia-Ukraine war, the Middle East crisis, unstable fuel prices, and the foreign exchange reserve shortfall, Bangladesh's economy has been facing challenges, leading the government to seek budget support from the global lender.
In addition to the WB request, the government has also approached other development partners for budget assistance in FY24. These include the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), Japan and the French development agency (AFD).
Since July 2023, the government has received $400 million from the ADB and $90 million from South Korea.
According to data from the Economic Relations Division, the government received a total of $11.09 billion in budget support by the end of the last fiscal year on June 30, 2023. This increase in budgetary support, especially since the Covid-19 pandemic, has been used to buy vaccines and stimulate economic recovery.
Besides, the government has bolstered its budget support programme in response to the economic challenges arising from the Russia-Ukraine war.
Economic Relations Division officials said the government received budgetary support of $1.769 billion in FY23, $2.597 billion in FY22, $1.09 billion in FY21 and $1.0 billion in FY20.
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