$250m WB budget aid unlikely this fiscal

With majority of reform requirements missing, coupled with some other factors, the World Bank is unlikely to release the second tranche worth $250 million from a credit line this fiscal year.
Officials said so as representatives of the Washington-based multilateral lending agency in a meeting with finance division officials in Dhaka Tuesday underscored prompt steps to accomplish the reforms.
They said the World Bank had disbursed the first tranche, amounting to $250 million, in March 2022 under the first Recovery and Resilience Development Policy Credit programme as budget support.
The development financier was supposed to provide a second tranche of another $250 million within this fiscal year that ends in June.
The aid package is aimed at strengthening fiscal-and financial-sector policies to sustain growth and enhance resilience to future financial shocks, including from the global climate change.
For the funding, the World Bank had put forward some reform requirements that need to be accomplished to get the second dollop from the credit line.
However, World Bank officials found majority of the 12 prior actions eluding execution and thus decided to go slow in disbursing the funds within the outgoing fiscal year, 2022-23.
According to sources, by this fiscal yearend the World Bank plans to disburse an amount under its Environment, Credit, and Rural Development (ECRD) programme, thus deferring the second tranche of DPC on recovery and resilience.
"Only a few reform requirements could be met so far," said a source who attended the meeting, seeking anonymity.
"Even how much time further needed to achieve the targets that are also not clear," he added.
According to sources the World Bank team informed the finance officials about the bottlenecks and put forward some suggestions as to how to get the reforms through.
"For the recovery and resilience DPC programme we have to achieve all the policy matrices to get second tranche disbursed," said a senior finance ministry official.
"There are some grey areas achieving which will be very tough."
For the recovery and resilience DPC recipe the policy matrices include preparation of a national tariff policy, automated chalan system for submitting income tax, public procurement authority, amendment of bank company act, issuing circular for strengthening corporate governance of state-owned banks, secure transaction act, reclassification list of social protection, preparation of national household database, public-private partnership (PPP) policy for power-transmission sector, and adoption of Mujib Climate Prosperity Plan.
Contacted, finance division additional secretary Rehana Perven, who chaired the meeting, told the FE the two sides reviewed the progress made so far in attaining the policy matrix relating to the credit programme.
She wouldn't elaborate on the negotiation outcomes.
World Bank senior economist Bernard James Haven, lead country economist for Bangladesh Yutaka Yoshino and economist Nazmus Sadat Khan attended the meeting.
The Bank's development-policy credit supports policy reforms to ensure a robust recovery from the COVID-19 pandemic, to sustain economic growth, and to enhance resilience to future shocks, including climate-change adversities.
The credit also supports transition from trade taxes to consumption and income taxes to help finance growth-enhancing public investments.
Moreover, the credit also propels financial-sector reforms which reflect government commitments in the 8th five-year plan to improve the depth and resilience of financial intermediation to finance private investment, accelerate growth, including through strengthening banking-sector oversight and developing capital-market instruments.

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