WB may give $75m post-Sidr recovery aid early next year

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A Z M Anas
The World Bank (WB) is moving ahead with a plan to extend US$75 million in budgetary support early next year to shore up the government's ability to avoid macro-economic risks in the aftermath of cyclone Sidr, finance ministry officials said.
The global development lender will funnel the aid money through its emergency disaster response fund, created after the 2004 Indian ocean Tsunami, making it available to Bangladesh by January next year.
"The bank, as we have been told, will channel the budgetary support under its emergency response mechanism to help us steer clear of macroeconomic risks," a senior finance ministry official told the FE Saturday.
"The bank is expected to place the relevant soft loan proposal before its board on January 10. If approved, the assistance will be made available by end-January," the official noted. The sources at the WB's Dhaka office also confirmed the development with regard to the loan proposal.
The sources said Praful C Patel, who oversees the bank's South Asian operations, will arrive this week to have meetings with the government officials on the proposed lending.
The post-cyclone emergency support is coming with no strings, finance officials insisted, but said the amount is "too meagre" in view of the colossal damages that was inflicted on an estimated 3 million people living along the country's southwestern coastal belt.
The interim administration, in a preliminary assessment, has concluded that the economic losses of Sidr will be a staggering US$2.3 billion, with private losses touching to $1.0 billion alone.
Finance ministry officials acknowledged that quick monetary support is crucial at the moment to maintain the macroeconomic stability, as domestic borrowing could prove to be "inadequate" to cross the current fiscal year's budgetary deficit, running as high as 5.6 per cent of GDP.
"The economy is already under strain, thanks to oil price hike, rise in global food prices and the post-flood impact. So, it is sure to spell trouble for the economy unless we get quick disbursement from the WB as it did following this year's monsoon floods," one official said.
In the second phase, the officials pointed out, the bank will extend support under a project being designed to help the Sidr-survivors restore their livelihoods.
The conditional cash transfers to be modeled after the existing delivery mechanism-test relief, cash for work or vulnerable group feeding-will be one of the major components.
Under the post-cyclone recovery project, the bank will support targeted groups -notably small traders, fishermen, and farmers-to get back on their feet.
Earlier, the bank announced $250 million in the aftermath of Cyclone Sidr to help millions of coastal people recover and to strengthen the country's disaster mitigation systems.
The bank's assistance could be used to support short-term needs like food imports, the rapid procurement of medical supplies, cash grants to the poorest victims and help to get people back on their feet and recovering their sources of income and livelihood.
The bank's assistance will also support coastal zone management to help Bangladesh face the challenge of climate change by both mitigating the inevitable impact of future storms and designing the necessary adaptations to protect people and their livestock.