World Bank lends Bangladesh $250M to build economic resilience

DHAKA, Bangladesh

The World Bank will lend Bangladesh $250 million to support the country’s reform efforts to sustain growth following the COVID-19 pandemic and to enhance resilience to future shocks, including climate change.

The Bangladesh First Recovery and Resilience Development Policy Credit -- the first in a series of two credits -- will help Bangladesh build a stronger fiscal and financial sector to sustain growth, according to a World Bank Dhaka statement on Tuesday.

The UN development financier and the Bangladesh government signed a financing agreement to this effect on Monday, the media statement said, adding that the program supports adjustments to the interest rates of public savings instruments such as the National Savings Certificates.

The credit is from the World Bank’s International Development Association (IDA), which provides concessional financing, and it has a 30-year term, including a five-year grace period.

Bangladesh currently has the largest ongoing IDA program totaling over $14.5 billion.

“Bangladesh has made a robust economic recovery from the COVID-19 pandemic,” Mercy Tembon, the World Bank country director for Bangladesh and Bhutan, was quoted in the statement.

“This program will further support the government’s policies to make the economy more resilient and competitive as Bangladesh strives to become an upper-middle-income country by 2031.”

The program will also support the National Tariff Policy to modernize taxes and foster a globally competitive export industry.

The cancellation of 8,451 megawatts of investments in coal-fired electricity generation projects will accelerate the country’s transition to decarbonization and a green economy, read the statement.

The World Bank in an assessment last week said a rebound in manufacturing and service sector activities led to strong growth in the last financial year as well as the first half of this year.

However, the headline inflation rose to 6.2% in February 2022, driven by a rise in both food and non-food prices. The March 2022 joint World Bank-IMF Debt Sustainability Analysis assessed that Bangladesh remained at low risk of external and public debt distress.