Negotiations with ADB on budgetary support credit to start next month
Tuesday, 11 August 2009
FE Report
The government would start negotiations with the Asian Development Bank (ADB) next month on US$740 million budgetary support credit from the lending agency, officials said Saturday.
The Manila-based anti-poverty lender would provide such a big budgetary support credit for the first time in history to weather the impact of the global economic meltdown and minimise the budget deficit of Bangladesh.
"The Bank (ADB) has informed us that the negotiations would be held sometime in September," a senior Economic Relations Division (ERD) official told the FE.
The 67-member Asia-Pacific donor agency has already assured of giving US$500 million to the government from its "Counter Cyclical Support Facility Fund" to fight the effect of the global economic downturn on the economy of Bangladesh.
Besides, it would give another $240 million as budgetary support credit to minimise the country's fiscal deficit, which has been projected at 5 per cent of the total Gross Domestic Product (GDP) in the current financial year of 2009-10.
ADB President Haruhiko Kuroda while visiting Bangladesh on July 23-24 assured the finance minister of the assistance to be spent for fighting the impact of the economic meltdown and minimise the fiscal deficit.
The ERD official said though the credit is costlier than their any other ongoing assistance, the government would take it to prepare itself for facing any possible financial meltdown.
Bangladesh has to repay the $500 million loan in five years with a grace period of three years. The interest rate for the credit would be about five per cent, which is much higher than its any previous loan, ERD officials said.
The multilateral donor usually gives long-term assistance at about 2.5 per cent interest rate, where the repayment period is 32 years.
The Manila-based lending agency would charge a higher rate also for its $240 million it assured to its good borrower Bangladesh as budget support incorporating some hard terms and conditions.
"If the negotiation is completed by next month, we are expecting disbursement of the $740 million assistance by December this year," the ERD official said.
He said the government might utilise a portion of the fund to support the export sector, which has been hit hard by the global economic recession.
The ERD official said the anti-poverty lender in the Asia-Pacific region is going to provide the big amount of budgetary support to Bangladesh for the first time in the history.
Previously, the World Bank provided much of the budgetary support needed under the national budgets.
The government would start negotiations with the Asian Development Bank (ADB) next month on US$740 million budgetary support credit from the lending agency, officials said Saturday.
The Manila-based anti-poverty lender would provide such a big budgetary support credit for the first time in history to weather the impact of the global economic meltdown and minimise the budget deficit of Bangladesh.
"The Bank (ADB) has informed us that the negotiations would be held sometime in September," a senior Economic Relations Division (ERD) official told the FE.
The 67-member Asia-Pacific donor agency has already assured of giving US$500 million to the government from its "Counter Cyclical Support Facility Fund" to fight the effect of the global economic downturn on the economy of Bangladesh.
Besides, it would give another $240 million as budgetary support credit to minimise the country's fiscal deficit, which has been projected at 5 per cent of the total Gross Domestic Product (GDP) in the current financial year of 2009-10.
ADB President Haruhiko Kuroda while visiting Bangladesh on July 23-24 assured the finance minister of the assistance to be spent for fighting the impact of the economic meltdown and minimise the fiscal deficit.
The ERD official said though the credit is costlier than their any other ongoing assistance, the government would take it to prepare itself for facing any possible financial meltdown.
Bangladesh has to repay the $500 million loan in five years with a grace period of three years. The interest rate for the credit would be about five per cent, which is much higher than its any previous loan, ERD officials said.
The multilateral donor usually gives long-term assistance at about 2.5 per cent interest rate, where the repayment period is 32 years.
The Manila-based lending agency would charge a higher rate also for its $240 million it assured to its good borrower Bangladesh as budget support incorporating some hard terms and conditions.
"If the negotiation is completed by next month, we are expecting disbursement of the $740 million assistance by December this year," the ERD official said.
He said the government might utilise a portion of the fund to support the export sector, which has been hit hard by the global economic recession.
The ERD official said the anti-poverty lender in the Asia-Pacific region is going to provide the big amount of budgetary support to Bangladesh for the first time in the history.
Previously, the World Bank provided much of the budgetary support needed under the national budgets.