The government has sought $1.32 billion from development partners before the budget of the 2023-24 fiscal year begins and hopes to receive these loans as budget support before 30 June this year.
In addition to $500 million, which will come from World Bank by June, the government also sought $400 million from Asian Infrastructure Investment Bank (AIIB), $320 million from Japan International Cooperation Agency (JICA) and $100 million from the government of South Korea.
In total, the government expects to receive $1.32 billion or approximately Tk 138.60 billion ($1 = Tk 105) as budget support.
Finance minister AHM Mustafa Kamal sent letters to South Korean deputy prime minister and minister of economy & finance Cho Kyung-Ho, AIIB president Jin Liqun and JICA president Akihiko Tanaka on April 9 separately.
The letter states finance minister AHM Mustafa Kamal mainly requested AIIB, JICA and the Korean government to co-finance with Asian Development Bank (ABD).
The Asian Development Bank took up the SERP-1 (Sustainable Economic Recovery Program) and SERP-2 to revive the economy following the global and regional economic uncertainty inflicted by the coronavirus pandemic. The ADB is expected to place the budget support for Bangladesh at its management review meeting on Monday.
Meanwhile, the IMF approved $4.7 billion loan proposal for Bangladesh on 30 January and released the first tranche of $476.27 million after three days.
Former World Bank chief economist Zahid Hussain told Prothom Alo, “Budget support coming from World Bank and three others sources is too little than required. This amount will give a relief for a while if this fund is not spent for import, but dollar crisis still persists.”
The letter addressing AIIB president stated Bangladesh previously received $250 million in budget support from AIIB under SERP-1 and will get another $400 million under SERP-2, and the country wants this $400 million now.
Bangladesh needs a large amount of fund now to pay the liability of 25 state-owned closed jute factories, provide loan to low-income and marginal traders, purchases electronic fiscal device, strengthen tax management, and introduce an information exchange system between income tax and VAT departments of National Board of Revenue, the letter added.
The letter addressing deputy prime minister and minister of economy & finance Cho Kyung-Ho also stated the same issues mentioned in the letter to AIIB president.
In his letter, finance minister AHM Mustafa Kamal said previously Bangladesh received $100 million from Korea Economic Development Co-operation Fund (EDCF) of the Korean government and the country needs another $100 million now.
The letter addressing JICA president Akihiko Tanaka states COVID-19 situation, the Russia-Ukraine war, soaring global food price, disruption of crop production by flood contributed to a rise in inflation in Bangladesh.
The government slightly adjusted the price of electricity, fuel and fertilizer to tackle subsidy. The development budget has also been reduced.
Besides, a time-bound system will be introduced for fuel prices from the next fiscal.
The $320 million fund, to be received from JICA, will be used for infrastructural development, social protection and employment creation, the letter mentioned.
Prothom Alo could not reach AHM Mustafa Kamal for a comment.
Speaking to Prothom Alo, former finance adviser to a caretaker government, AB Mirza Azizul Islam said, “Since export earnings and remittance is not satisfactory while the reserve witnesses a decline. It will be better to get this budget support because budget support usually comes without any condition, so, it will be better for Bangladesh as much as the country can get before June.”
*This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna