WB likely to provide $500m budgetary support for 3 yrs

The World Bank is likely to provide budgetary support to Bangladesh after five years of its discontinuation. The Bank recently responded to the government's request for deficit financing of the national budget, officials said Monday.
The ministry of finance (MoF) officials said the World Bank (WB) might extend nearly US$500 million credit support for financing the deficit budget of Bangladesh in next three years.
A WB team visited Bangladesh in the last week of August for reviewing necessity of budgetary support credit for the government.
In the last annual general meeting of the WB-IMF in 2013, Finance Minister AMA Muhith requested the WB for extending budgetary support for Bangladesh.
 "The WB mission has already discussed the issue with the government. The credit named--Programmatic Development Policy Support (PDPS)-- has been proposed to be provided for three years. But the amount is yet to be fixed," a senior MoF official said.
The WB will set some indicators for the government on the financial and policy reforms which need to be fulfilled to receive the proposed credit, he added.
As per the preliminary discussion, the WB mission has informed the government that it is interested to provide the credit in three installments based on reform progress during the three years of the programme, the official said.
Meanwhile, the WB provided last budgetary support five years ago in 2008 for the Bangladesh government to meet deficit financing of the national budget in the aftermath of a devastating cyclone and two consecutive floods in 2007.
The WB in June 2008 approved two budget support programmes worth $320 million to help the government implement its wide-ranging governance and economic policy and energy reforms.
Of the funds, $200 million had been provided as Transitional Support Credit (TSC) to help lessen pressure on the budget for 2007-08 fiscal year and the rest for the power sector.
An Economic Relations Division (ERD) official said the government will have to undertake reforms in various sectors to receive the proposed budgetary support for three years. "The areas where the reforms will take place will be decided after discussion with the WB."
 "It is good news for Bangladesh that the WB is coming forward with the budgetary support credit after five years," he told the FE.
Initially, policy and institutional reforms in Bangladesh had been supported by the World Bank through a series of budget support operations, known as Development Support Credits (DSC).
As part of the series, four credits totaling US$900 million have been provided to Bangladesh since 2003. The last credit - DSC IV- was approved by the World Bank in May 2007.
The first DSC worth $300 million was approved by the Bank in 2003. The second DSC worth $200 million was approved in 2004. In the DSC-III and DSC-IV, it provided $200 million each for the country's budget deficit financing.
The ERD official said they are hopeful of getting the proposed budgetary support as the government has already done adequate reforms under the current International Monetary Fund's Extended Credit Facility (ECF) loan programme.
The three-year ECF arrangement for Bangladesh was approved by the Executive Board of the IMF on April 11, 2012 for a total amount equivalent to SDR 639.96 million (about US$986 million).