Govt seeks $6.15bn loans from WB

Bangladesh has sought $6.15 billion in loan support from the World Bank to implement a total of 54 projects in the next three years.

A formal proposal has been put forward to the Washington-based lending agency to obtain the required loans from the lender’s soft loan window International Development Agency (IDA)-20, official sources said.

The government expects to get $2.05 billion IDA credit per year during the 2022-2025 period to implement projects.

Besides, the government has also sought $1 billion in budget support from the lender. In total, $7.15 billion loans have been sought from WB, sources said. 

Bangladesh has sought the loans from the WB at a time when it is struggling with an acute US dollar crisis triggered by the Russia-Ukraine war that has put the country’s strong corona recovery in jittery.

The country’s import bills have witnessed an unprecedented jump recently because of the war-induced global food and energy price volatility.

The country’s foreign reserves came under tremendous pressure with import bills surpassing the exports and remittance inflow.

Former World Bank lead economist Dr Zahid Hussain said: “Bangladesh can get $3.30 billion from IDA-20 to implement projects. In that case, the sector and character of the project may be considered.”

He also thinks that the country can get budget support as well, but in that case financial sector, energy price, social security and trade sector may require some reforms.

Recently, a report was placed before the WB vice-president, which says that the lender has so far committed $37.4 billion in loans to Bangladesh since 1972.

Of the committed funds, WB has so far disbursed $26.64 billion which has been utilized in the field of education, health, power, improving the water discharge system, and sanitization besides the financial sector and sustainable development. 

Currently, some 54 projects are underway with financial assistance from the WB, of which $2.54 billion will be spent on seven projects.

Bangladesh, on the other hand, has repaid $6.37 billion in credit, including $5.6 billion as principal amount and $770 million as loan interest.

Its total outstanding loans to the WB now stand at $19.4 billion, which is 32 percent of its total overseas loans.

Bangladesh is a key IDA loan recipient in the world. It received a $2,161 million loan commitment from IDA in the 2021-22 fiscal year, the second highest loan commitment after Nigeria which fetched $2.40 billion.

Bangladesh got $1.67 billion fund released from the IDA’s committed $2.16 billion loans, finance ministry data showed. 

IDA’s loan receipt was $1.57 billion in 2020-21, $1.51 in 2019-20, $2.03 billion in 2018-19 and $1.42 billion in 2017-18 fiscal year, according to the finance ministry.

In the wake foreign currency crisis, the government has stepped up efforts to get foreign loans. Besides the World Bank, budget support has also been sought from the Asian Development Bank.