WB to give $250m aid in FY '21 to create jobs

Deal signing for DPC-III in April

FHM Humayan Kabir | Tuesday, 2 March 2021

After a long stalemate, the World Bank (WB) has finally agreed to provide budgetary support worth US$250 million to Bangladesh within this fiscal year (FY), 2020-21, officials said on Monday.
Both the WB and the government completed negotiation last week on providing the third tranche of the Development Policy Credit (DPC), assured three years ago, for facilitating job creation in Bangladesh, they added.
The Washington-based global lender, in a negotiation with the government in 2018, assured of providing the DPC worth $250 million, of the total assured credit of $750 million.
"We have completed negotiation with the WB last week for getting the DPC-III," Additional Secretary of the Economic Relations Division (ERD) Abdul Baki told the FE on Monday.
"We are hopeful of confirming the third tranche of the proposed $750-million DPC by early next month (April) through signing a deal," he added.
Another ERD official said the DPC-III has been pending for more than a year, as the government could not comply with at least two conditions of the policy matrix for getting the assistance.
In the recent months, the government has made some progress on the policy matrix, tagged by the WB to qualify for obtaining the DPC-III.
In line with the WB matrix, the government has already taken initiatives to finalise the National Skills Development Policy (NSDP) and the daycare law, the official added.
Mr Abdul Baki said the loan was expected to be approved by the WB board in late this month, and they would be ready for signing a confirmation deal by early April.
Since the Covid-19 has severely affected the country's economy, the budgetary support would be very helpful for recovering from the losses and facilitating job creation activities, he opined.
According to the WB, the DPC will support the government's reform initiatives to address the country's job-related challenges by - modernising trade and investment environment; strengthening systems that protect workers and build resilience; and improving policies and programmes that enhance access to jobs for vulnerable population, especially during the pandemic.
Meanwhile, the Washington-based lender has restarted the budgetary support operation through initiating the assured $750-million DPC for Bangladesh after 10 years - mainly to create more jobs in the country, officials said.
The WB provided last budgetary support credit worth $175 million in FY 2007-08.
The ERD official said the lender restarted budget support programme for Bangladesh through confirming $250 million worth of first tranche of the $750-million DPC through a negotiation in 2018. Then it provided the second tranche worth $250 million in early 2020.
According to the sources, the Ministry of Finance has been discussing with the Washington-based lender for the last one year to get the budgetary support, suspended for over the last 10 years.
That time, the WB set some policy reform matrix, like - automated (fixation of) fuel oil, gas and electricity prices; implementation of the VAT law and formulation of its rules; corporatisation of some poor-performing power distribution companies; strengthening the load dispatch centre of the Bangladesh Power Development Board (BPDB); preparing the NSDSP; and enacting a law on daycare centre.
The WB also asked the government to formulate a market-based interest rate system for the national savings certificates (NSCs) by slashing the government's intervention on it, and quicken handing over of lands for the special economic zones (SEZs) to get the proposed budgetary support credit.
Later, following requests of the government, the WB relaxed its previous matrix, and offered some new conditions - focusing on more employment generation.

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