Now govt seeks $800m from Japan

FHM HUMAYAN KABIR | Published: May 31, 2024 23:47:41

A sum of US$800 million is now sought by the government from Japan as budget-support credit to finance shortfall in the current fiscal, officials say, in a last-minute quest.
Apart from the already-taken IMF loan, the government has also approached the World Bank, the Asian Development Bank (ADB), French lender AFD, and the Asian Infrastructure Investment Bank (AIIB) for budget support to make up for the deficit.
The largest bilateral development partner of Bangladesh has yet to reply to the government request for the financial-assistance confirmation, according to them, although only a month is now left before the financial year ends.
"We have already requested our largest bilateral development partner, Japan, for confirming at least $800 million worth of budget support. It will give our economy a cushion," a senior Ministry of Finance (MoF) official told the FE correspondent.
The government framed for the current 2023-24 fiscal year a Tk 7.61 trillion worth of national budget with a massive Tk 2.61-trillion gap between income and expenditure. The deficit is 5.2 per cent of the country's GDP or gross domestic product.
According to the government plan, internal borrowing is the main source of this deficit financing, amounting to Tk 1.55 trillion including borrowings from the banking system.
And a total of Tk 1.27 trillion worth of funds are being mobilised from external sources to make two ends meet.
Officials at the MoF have said the government is "aggressively looking for budget" support to bankroll its deficit budget.
They agree Bangladesh's economy is facing severe challenges due to the economic slowdown for some internal and external shocks.
Economic Relations Division (ERD) officials say they have already sent request letter to all the above-mentioned development partners for getting confirmation of the financial assistance.
In April, the MoF sat with a WB team to receive at least $500 million in budgetary support within this fiscal year, ending on June 30, a senior MoF official said.
"Besides, the ERD is also trying to convince ADB, AFD and AIIB authorities about the need for confirmation of the funding within this FY2024."
Meanwhile, the International Monetary Fund (IMF) has assured of disbursing the 3rd tranche worth $1.15 billion from a loan package as balance-of-payments support to the government.
The loan is likely to be disbursed within this month of June, the MoF official hopes.
The IMF already disbursed the first tranche worth $447.8 million in February 2023 and the second worth $681 million in December 2023.
The board of the Washington-based lender approved the $4.7 billion in loan on January 30 for Bangladesh, with strings attached that prompt reforms-like subsidy cuts, banking upgrading, interest-rate uncapping, exchange-rate relaxation and so.
Besides, the government is also expecting $400 million in budget support from the ADB and another $400 million from the AIIB within this last month of the fiscal.
In the last FY2023, the lenders provided a total of $1.77 billion as the budgetary support to Bangladesh, the finance ministry official said.
According to the MoF, Bangladesh received budgetary support worth $1.77 billion in FY2023, $2.597 billion in FY2022, $1.09 billion in FY2021, and $1.0 billion in FY2020.
Meanwhile, the Bangladesh government had received a total of $11.09 billion in budget-financing assistance till last FY.