TDS Desk:

The interim government has received verbal confirmation from the World Bank for $1 billion in budget support, and the Asian Development Bank has also positively responded to a request for $1 billion, according to finance ministry officials.

Finance Division officials are currently preparing formal proposals to secure budget support from these two global lenders to pay off due power and energy import bills.

Japan, which has mainly funded project loans so far, has also responded favourably to the government’s request for budget support, prompting officials to prepare a wish list for $2.7 billion in aid from the Japan International Cooperation Agency (Jica).

The government is pursuing $3 billion in budget support from the International Monetary Fund (IMF), in addition to the $4.7 billion already agreed upon.

Additionally, Bangladesh is seeking loans from other lenders, including the Asian Infrastructure Investment Bank (AIIB).

Officials told that a formal meeting is scheduled for the first week of September, during World Bank Vice President Martin Raiser’s Dhaka visit, to finalise the details of the $1 billion verbally assured by the global lender.

Since assuming office in the second week of August, Finance Adviser Salehuddin Ahmed and other advisers of the new interim cabinet have met with representatives of bilateral and multilateral development partners to discuss the country’s urgent financing needs.

Their responses were prompt and positive, leading finance ministry officials to be optimistic about securing additional external assistance to meet foreign obligations and bolster reserves.

A finance ministry official, on condition of anonymity, told that, “We are quite optimistic about securing foreign loans during the interim government’s tenure as partners are also showing strong interest in the government’s proposals.”

“With the expected budget support, it will be possible to elevate foreign exchange reserves to a satisfactory level even after settling the government’s import arrears in various sectors,” the official hoped.

The Energy Division has been under pressure from foreign suppliers over unpaid fuel oil and gas import bills. India has even reduced power exports to Bangladesh several times due to payment delays.

On 21 August, Power, Energy, and Mineral Resources Adviser Muhammad Fouzul Kabir held a meeting with the World Bank’s Country Director for Bangladesh Abdoulaye Seck.

After the meeting, Kabir told reporters, “There is still an outstanding payment of $2.2 billion for electricity and energy imports. We have requested $1 billion in support from the World Bank to address this.”

Earlier, on 13 August, Finance Adviser Salehuddin Ahmed also met with Abdoulaye Seck, where the budget support was also discussed.

“I have requested extensive assistance from the World Bank to boost the economy, and they have assured us of their support for the people of Bangladesh,” Salehuddin Ahmed told reporters after the meeting.

On 19 August, after meeting with the Japanese Ambassador to Dhaka IWAMA Kiminori, the finance adviser said, “Japan has primarily provided project assistance till now. We have now asked them for budget support, and they have responded positively.”

On the evening of 29 August, IMF Mission Chief to Bangladesh Chris Papageorgiou and Resident Representative Jayendu De held a Zoom meeting with the finance adviser to discuss the possibility of an additional $3 billion loan from the IMF, according to finance officials.

Bangladesh signed a $4.7 billion loan agreement with the IMF in January 2023, and Bangladesh has already received $2.3 billion in three instalments under this agreement.

With Pakistan recently securing a $7 billion bailout from the IMF, Bangladesh is hopeful of obtaining an additional $3 billion from the agency.

In a recent interview, the Bangladesh Bank governor expressed interest in securing another $3 billion loan from the IMF.

The finance adviser and the Bangladesh Bank governor plan to discuss this potential new loan with the IMF during the IMF-World Bank board meeting in Washington next October.

Before that, an IMF review mission is scheduled to visit Bangladesh in October, where this matter is expected to be addressed.