Govt seeks a DSC replica from WB to meet resource gap

---

FE Report
The interim government has asked the World Bank to process a transitional budgetary support credit, which it requires to fund the country's deficit financing in fiscal 2007-08.
"We've requested the bank to prepare groundwork for processing the interim budget support in view of the discontinuation of the development support credit (DSC)," the source noted.
"The bank officials, as we've been told, are currently reviewing the priority areas where the lending agency's support is needed most," the source added.
Although the size of the proposed loan is yet to be finalised, the relevant sources indicated that the amount would not be less than US$ 200 million.
The caretaker government unveiled a Tk 871.37 billion national budget, with deficit running as high as 4.8 per cent of GDP (gross domestic product). The budgetary deficit was 3.3 per cent of the GDP in fiscal 2006-07.
The government's new push for the transitional budgetary support also reflects its frantic bid to get the current fiscal's required foreign aid worth Tk 63.05 billion. The target was Tk 51.83 billion in the revised budget of the last fiscal.
If approved, Bangladesh will be the first Asian nation to receive such a specially-tailored loan from the International Development Association (IDA), the bank's concessional lending arm, a competent source noted.
The source said only a handful of African countries, where the interim governments existed, received such credit from the Washington based global lending agency.
He said that if the bank was satisfied with the policy reforms, the credit will likely be released at the end of December.
The source hinted that the bank credit would mainly be contingent upon the policy and institutional reforms, with major thrusts on fighting corruption and furthering reforms in the energy sector and trade.
He also pointed out that although power sector reforms topped the list on negotiations for the fourth tranche of DSC, the bank might press the government for carrying forward the reform in the energy sector, in general, and the power sector, in particular.
The source, who was involved in the previous DSC negotiations, said the bank would also take the views of the International Monetary Fund (IMF) on the country's macroeconomic management and exchange rate policy.
The source pointed out the global financial institution is working on the criteria for eligibility and requirements of the proposed credit.
The bank, the country's major donor, has provided US$1.1 billion in policy-based credits to Bangladesh since 2003, including US$300 million credit in support of education sector reforms.