ADB won't release second tranche of budgetary support credit

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FHM Humayan Kabir
The Asian Development Bank (ADB) has not released the second tranche of the budgetary support credit worth US$55 million due to the government's failure in fulfilling some pre-conditions set earlier by the lender, an official said.
"We requested the disbursement of the second tranche of the committed budgetary support from the ADB in June this year. But it is yet to do following the failure to fulfill some of the pre-conditions of the lender," a senior official of the economic relations division (ERD) told the FE.
The Manila-based donor agency asked the government to enact the "right to information ordinance" and prepare a "national integrity strategy", but the country has failed to do so in time, he said.
Under a project on good governance, the 67-member lending agency early last financial year made a commitment to provide $150 million programme loan (budget support credit) to Bangladesh in three tranche.
After the confirmation, the government received the first tranche worth $55 million of the loan within a short period.
The ERD official said: "Since the country had faced a big budget deficit due to increased subsidy and higher import bills of oil, food and fertiliser, we requested the lender to disburse the second tranche of the loan by June this year. But it did not do so."
The country last FY08 faced a budget deficit of 4.8 per cent of the gross domestic product, 0.6 per cent up from the initial target of 4.2 per cent.
The government provided nearly Tk116 billion as subsidy due to higher import bills of fertiliser, food, and fuel oil in the last fiscal against the initial projection of Tk 59.99 billion in the national budget.
As the World Bank alone disbursed nearly $300 million budgetary support credit in the last FY08, the government had been able to minimise the financial deficit.
The ADB made the commitment for $150 million assistance to the government to strengthen the Anti-Corruption Commission (ACC), judicial system and Cabinet Division, recast the Public Service Commission (PSC) and facilitate Chittagong port operation.
The caretaker government's vigorous initiatives on reform at different sectors like EC, ACC and PSC prompted ADB to provide the $150 million loan.
The senior ERD official expected that as the council of advisers last month approved the proposed "right to information law", the multilateral lending agency would soon come forward to disburse the remaining fund.