Govt lobbying for emergency flood aid from WB

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FE Report
The caretaker administration has started lobbying with the World Bank for securing emergency flood recovery aid instead of transitional support credit to help accomplish post-flood rehabilitation task, a competent source said.
"The present interim administration is courting the World Bank for obtaining emergency flood assistance, setting aside its previous priority for transitional support credit," a competent source said.
"Although the assessment of flood damage is yet to be conducted, the government may seek US$150- $200 million in emergency flood aid from the bank," the source added.
It is reliably learnt that Zakir Ahmed Khan, who represents Bangladesh at the lender's headquarters in Washington, is currently negotiating with Bank's top officials to ensure faster delivery of emergency flood aid.
However, Khan, also an executive director of the bank, did not respond to the FE's written queries.
The government's new push for flood assistance is part of its strategy to ensure faster aid delivery, while eschewing the requirement of policy reform associated with the transitional support credit, relevant sources said.
Government officials say it is relatively easy to get emergency aid like flood assistance, as this type of loan comes with no strings attached.
By contrast, they said, policy credits like transitional support credit are linked to reforms in the bank's preferred areas.
The global lender is reported to have attached an array of conditions, notably power sector reform and Agrani Bank privatisation, to the release of the transitional credit.
The sources pointed out that the emergency flood aid would be released in the form of budgetary support, not as balance of payment (BoP) support.
"In 1998, Bangladesh was forced to take BoP support to help fight the devastating deluge. But this time the government needs no BoP support in view of reasonably higher foreign exchange reserves. So, budgetary support will be critical for the present administration to narrow down fiscal deficit," a source said.
In case of transitional support credit, the government is already in talks with the Washington-based development lender for $200 million aiming to minimise deficit financing.
In June, the present interim administration unveiled a Tk 871.37 billion budget for fiscal 2007-08, with the budgetary deficit running at 4.8 per cent of GDP (gross domestic product) as against 3.3 per cent in the just-out fiscal.
The transitional loan is being negotiated as budgetary support credit, and is supposed to be released by the end of December.
The transitional budgetary loan is needed to meet the government's foreign aid requirement worth Tk 63.05 billion as set for the current fiscal, a target considered to be ambitious. The target was Tk 51.83 billion in the revised budget of the past fiscal.

Another source said it is highly unlikely that this time the bank will disburse such a big amount as emergency flood assistance, given the less-severe flooding compared to the ones in 1998 and 2004.
In 2004, the bank provided around $154 million as post-flood rehabilitation assistance while the amount was $200 million in 2004. At that time, the bank channelled funds from the Private Sector Infrastructure Development Project (PSIDP).
The International Development Association (IDA), the bank's soft-lending window, had responded to the country's devastating flood in 1998, channelling $200 million in emergency aid.
The assistance package was intended to aid Bangladesh in maintaining macroeconomic stability, while helping to contain pressure on balance of payments.