The World Bank (WB) has given assurance to provide $300 million under the Financial Sector Support Project (FSSP) with the Bangladesh Bank (BB) aiming to facilitate long-term financing, particularly in productive sectors.
The assurance came at a meeting of a six-member delegation, led by visiting WB Vice President for South Asia Region Annette Dixon, at the BB headquarters in Dhaka on Tuesday with BB governor Dr Atiur Rahman in the chair.
"We expect that all formalities in this connection will be completed by the end of June this year," a BB senior official, familiar with the process, told the FE after the meeting.
He also said any manufacturers would be allowed to receive low-cost fund under the proposed project.
Currently, the central bank has a short-term Export Development Fund (EDF) involving $ 1.5 billion for the country's exporters.
The EDF loans from the central bank are payable by the banks upon receipt of exports proceeds within 180 days from the date of disbursement, extendable by the BB up to 270 days in case of a longer period for repatriation of export proceeds.
"To ease scarcity of long-term lending, the BB is now working with the WB in shaping up a longer-term lending window for capital investment by manufacturers," the central banker explained.
He also said the FSSP would comprise three major components, namely strengthening financial market infrastructure, strengthening regulatory capacity and supporting long-term finance.
Other members of the WB team are Johannes Zutt, country director, Bangladesh, Nepal and Bhutan, Hassan Zaman, senior adviser, South Asia Region, Salman Zaidi, lead economist, WB Office in Dhaka, Shah Nur Quayyum, financial sector specialist, WB Office in Dhaka, and Soyab Ali, security specialist, WB Office in Dhaka.
On the other hand, all four deputy governors of the BB and high officials concerned also attended the meeting.
After the meeting, the WB vice president told reporters that she had had an opportunity to visit Bangladesh to see the impact of collaboration and partnership with the central bank.
"We're discussing further collaboration, particularly in how the BB can provide access to longer term finance," Ms. Dixon said while replying to a query about undertaking any fresh project with the BB.
She also said the WB was discussing with the government about various reforms to improve the environment for private sector growth.
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