BD requests AIIB, JICA, Korea to disburse $820m

Bangladesh has requested disbursement of US$ 820 million fund from the development financiers and Korean government, apart from the International Monetary Fund (IMF) loan, officials said.
The fund would be used for attaining inclusive recovery from the COVID-19 pandemic fallout, continued efforts towards sustainable development, and ensuring solid macro-economic stability, they added.
Finance Minister A H M Mustafa Kamal sent separate policy letters on April 9 to the Asian Infrastructure Investment Bank (AIIB), Japan International Cooperation Agency (JICA), and Korean government for the credit disbursement under the Sustainable Economic Recovery Programme (SERP).
He requested them to disburse the budget support credit within the current fiscal year, ending on June 30.
When contacted, the finance minister said over phone, "We have sought the funds which were agreed upon earlier."
Mr. Kamal requested the AIIB and the JICA to disburse $400 million and $320 million respectively under the SERP (Subprogramme 2), implemented by the Asian Development Bank (ADB).
He also requested for obtaining $100 million Economic Development Co-operation Fund (EDCF) budget support loan from the Korean government under the co-financing scheme with the ADB.
The Korean government has already provided a budget support credit assistance of $100 million under the SERP Subprogramme 1.
The SERP is financed by the ADB in two tranches to support Bangladesh's economic recovery from the COVID-19 pandemic fallout amid heightened regional and global economic uncertainty. Its first tranche amounts to $250 million and the second tranche amounts to $400 million.
The Subprogramme 2 aims to deepen the reforms initiated in the Subprogramme 1, with a renewed focus on strengthening the public financial management (PFM) system and improving access to finance for the underserved market segments, the policy letters mentioned. Bangladesh achieved all the policy actions, set under the SERP, based on which the ADB's fact-finding mission was concluded on March 27. The manila-based lender has scheduled the management reviewing meeting (MRM) for consideration of the loan programme by its board on April 17.
The budget support provided by the AIIB and the EDCF would help to create a fiscal buffer, help the external sector to overcome the stress on balance of payment (BoP), and continue funding operations and policy actions, according to the letters.
Besides, the support provided by the JICA through co-financing with the ADB would help to partly finance the ongoing budgetary challenges due to the pandemic-induced higher fiscal deficit and the Ukraine war spillover effects.
The fund would also continue financing essential expenditures on social and physical infrastructure, social protection, and job creation, the letters added.
The Ministry of Finance officials expected to receive the loans from the AIIB, JICA and Korean government within the next two months.
On the other hand, the World Bank is likely to provide budget support worth $500 million within the next two months.
The government prepared the Tk 6.78-trillion national budget for the current fiscal year (FY), 2022-23, anticipating a deficit of Tk 2,229 billion. It has been searching for budgetary supports to minimise the fiscal deficit as well as to ease pressure on the foreign exchange reserve.

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