WB to provide $130m to help food price-hit poor
Friday, 31 October 2008
FE Report
The World Bank (WB) will provide a US$130 million credit to Bangladesh to assist poor families affected by high food prices.
The Washington-based multilateral donor agency approved the Food Crisis Development Support Credit Project, which is part of the WB's fast-track Global Food Response Programme (GFRP), the WB said in a statement Wednesday.
The financing is designed to ease the pressure on the country's current budget, which is staggering from expansion of food-related spending including social protection programmes, according to the WB.
"The spike in food prices, compounded by rising prices of other commodities, has pushed over four million Bangladeshis back into poverty," said WB's Country Director Xian Zhu.
"This credit will help reduce the pressure on the budget and ensure continuation of the government's social protection programmes, designed to help the poorest people deal with rising food costs," added Mr. Zhu.
According to a WB projection, the food price shock has increased Bangladesh's poverty rate by around 3 percentage points. It also found that nearly 8 per cent of the surveyed households pulled their children out of schools to get jobs to assist their families cope with the crisis. In addition, many poor households have cut their food intake.
The government has allocated US$800 million in its FY09 budget to deal with this crisis. These measures include making food grain, particularly rice, available to poor people at subsidised prices, scaling up existing safety net programmes, setting up a new employment guarantee scheme to help people in poor areas, and increasing the country's strategic food reserves.
The Bank is also providing ongoing assistance to strengthen Bangladesh's social safety net programmes, including a new 100-day employment guarantee scheme that started on September 15 this year. Meanwhile, the country has taken several actions over the last 15 years that have strengthened the safety net system.
For example, the country is gradually moving to cash-based safety nets to avoid both inefficiencies and possible diversion of funds along the complex procurement, storage, and distribution chain. NGOs and development partners are helping maintain oversight of many of the safety net programmes.
"It is critically important to help Bangladesh cope with this crisis," said Vinaya Swaroop, World Bank Lead Economist and project task team leader.
Bangladesh's progress in strengthening its own institutional arrangements for public expenditure, financial management and procurement is reflected in its improved rating under the WB's Country Policy and Institutional Assessment (CPIA).
The credit from the International Development Association (IDA), the WB's concessionary arm, has 40 years to maturity with a 10-year grace period; it carries a service charge of 0.75 per cent.
The World Bank (WB) will provide a US$130 million credit to Bangladesh to assist poor families affected by high food prices.
The Washington-based multilateral donor agency approved the Food Crisis Development Support Credit Project, which is part of the WB's fast-track Global Food Response Programme (GFRP), the WB said in a statement Wednesday.
The financing is designed to ease the pressure on the country's current budget, which is staggering from expansion of food-related spending including social protection programmes, according to the WB.
"The spike in food prices, compounded by rising prices of other commodities, has pushed over four million Bangladeshis back into poverty," said WB's Country Director Xian Zhu.
"This credit will help reduce the pressure on the budget and ensure continuation of the government's social protection programmes, designed to help the poorest people deal with rising food costs," added Mr. Zhu.
According to a WB projection, the food price shock has increased Bangladesh's poverty rate by around 3 percentage points. It also found that nearly 8 per cent of the surveyed households pulled their children out of schools to get jobs to assist their families cope with the crisis. In addition, many poor households have cut their food intake.
The government has allocated US$800 million in its FY09 budget to deal with this crisis. These measures include making food grain, particularly rice, available to poor people at subsidised prices, scaling up existing safety net programmes, setting up a new employment guarantee scheme to help people in poor areas, and increasing the country's strategic food reserves.
The Bank is also providing ongoing assistance to strengthen Bangladesh's social safety net programmes, including a new 100-day employment guarantee scheme that started on September 15 this year. Meanwhile, the country has taken several actions over the last 15 years that have strengthened the safety net system.
For example, the country is gradually moving to cash-based safety nets to avoid both inefficiencies and possible diversion of funds along the complex procurement, storage, and distribution chain. NGOs and development partners are helping maintain oversight of many of the safety net programmes.
"It is critically important to help Bangladesh cope with this crisis," said Vinaya Swaroop, World Bank Lead Economist and project task team leader.
Bangladesh's progress in strengthening its own institutional arrangements for public expenditure, financial management and procurement is reflected in its improved rating under the WB's Country Policy and Institutional Assessment (CPIA).
The credit from the International Development Association (IDA), the WB's concessionary arm, has 40 years to maturity with a 10-year grace period; it carries a service charge of 0.75 per cent.