Two major WB loans unlikely this fiscal

The World Bank (WB) has taken a 'go-slow' approach towards finalisation of its pledged US$800 million loans for Bangladesh's budgetary support and financial sector programme putting the government's current expenditure under pressure, officials said Friday.
Officials said if the WB's loans become uncertain in the current fiscal amid the prevailing slow revenue growth, the country's fiscal management will be in trouble.
They said the WB has suddenly delayed its processing works for two separate loans -- some $500 million budgetary support and $300 million for financial sector support programme -- without showing any reason.
Meanwhile, the government has already written to the Bank to speed up the processing and finalisation of the two loans within this financial year as the government's internal resources mobilisation target is going to fall short of its attainment, a senior Ministry of Finance (MoF) official said.
The Economic Relations Division (ERD) Secretary already sent a letter to the World Bank's Bangladesh country director recently to finalise the proposed loans for the country, he added.
"We do not know reasons behind the go-slow move of the Bank. If it delays the two important loans amid the lower revenue base this fiscal, the country's financial management will be in trouble," a senior MoF official told the FE requesting anonymity.
The WB last year assured Bangladesh of providing budgetary support and a financial sector support programme loan within the current financial year 2014-15.
Accordingly, it also sent several missions to Bangladesh which discussed with the MoF, the ERD and several other offices of the government for confirming the loans.
"Suddenly, the lender has started delaying processing work of the proposed loans. It has also hinted at considering those in the next financial year," said a top ERD official.
During the first half (Jul-Dec) of the current FY2015, revenue collection by the National Board of Revenue fell short of the target by Tk 26.56 billion mainly due to failure in achieving target by VAT and customs wings of the board.
According to NBR data, the revenue board collected Tk 448.04 billion in July-December against the target of Tk 474.58 billion during the period.
The overall economic slowdown in the country, sluggish trends in export and negative growth in import in July-December period caused such a huge shortage in revenue collection during the period, the NBR said.
Under the proposed $300 million loan, the WB is to support automation of the Bangladesh's state-owned banking sector, insurance capacity building and private enterprise support.
Besides, the WB was also working with the government to confirm nearly $500 million budgetary support, to be disbursed in three instalments in three years from FY2015.
The WB is the largest donor of Bangladesh. It usually makes commitment for US$1.3 billion assistance and disbursement of nearly $700 million annually.
During July-November period of the current FY2015, the Bank disbursed only $243.71 million which is much lower from that of the corresponding period last FY2014.
The WB disbursed record highest $950 million (including $140 million of the multi-donor trust fund) in the last FY2014.
The size of Bangladesh's budget in the current fiscal year is Tk 2.50 trillion with Tk 675.52 billion deficit.
The government has a target to earn Tk 1.93 trillion from the revenue income to finance the budget.
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