The World Bank will help improve Bangladesh's financial sector in enabling it to deliver better services to productive ventures, especially for promoting export-oriented industries, official sources said.
Ministry of finance (MoF) officials said the Bank had already pledged US$300 million worth of loans to be utilised through the central bank.
"The Bank has assured us of providing $300 million worth of assistance to improve financial market. The lender will provide long-term financial support to the export-oriented industries, too," a MoF official told the FE.
He said the $300 million would come under a proposed US$350 million Financial Sector Support Project (FSSP).
The money will be provided to Bangladesh Bank for strengthening the country's financial market infrastructure, regulatory capacity, and long-term financing to the industrial consumers.
The rest of the $350 million cost of the project will be made available by the Government of Bangladesh.
The MoF official said the lion's share of the $350 million credits under the FSSP would be utilised to improve financial health and safety standards of the private-sector industries with the aim of reducing their credit risks, supporting industries to be relocated from one place to another, and upgrading the long-term capital market and pension market of the country.
He said the funds would also be utilised to strengthen the central bank through improving the Credit Information Bureau, Bangladesh Financial Intelligence Unit and Payment and Settlement System.
"Bangladesh's export-oriented industries are doing well. They need long-term financial support to recover from their credit risks. The World Bank has come forward to support the industries," said the ERD official.
He said since the Bangladeshi industries are not getting long-term financial support from the foreign lenders, the proposed World Bank money would be provided through the Bangladesh Bank at lower rate of interest and longer repayment period.
"The initiative of providing financial support to the industries for relocating to a safe place from the risky areas will also be very helpful for our economy," he added.
A Bangladesh delegation, headed by Bangladesh Bank Governor Dr Atiar Rahman, is now in Washington to discuss the scope of the proposed financial-sector-support project, the ERD official said.
Meanwhile, a WB mission nearly a month ago had discussed with the Bangladesh Bank, MoF and other relevant government agencies modalities of financing the project in Bangladesh, officials said.
The ERD is expecting confirmation of the $300 million loan within this financial year (2014-15).
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