Govt lobbying hard for WB budget aid

The government is trying to receive $250 million budget support the World Bank pledged to offer, helping the country lower its fiscal deficit in the current financial year, officials said on Monday.

Since the 2nd tranche of the bank's $750 million development policy credit was disbursed in FY 2019-20, the government is in a hurry to get the final portion within June, they said.

A Ministry of Finance (MoF) official said they were discussing with the Washington-based lender to get the policy lending released.

He said there are some bank-set policy indicators under which the government needs to carry out reforms for availing the loans.

"Some of the reform programmes have been completed and some are yet to be done. Most of the pending reforms are really difficult to comply within a shorter period. So, we are discussing with the bank for relaxation," he added.

Among the policy matrix, the reforms in the energy and power sector and in the revenues management are taking some time.

The government side is highlighting the COVID-19-related disruptions to get the third package for Bangladesh disbursed within FY2021, he added.

In June, the government received the second instalment, amid the impact of the deadly coronavirus on the national economy.

The 1st instalment was confirmed in January last year after approval by its board on December 12, 2018.

When asked, additional secretary of the Economic Relations Division (ERD) Shahbuddin Patwary said that they were expecting to secure the last instalment within June this year.

Since Bangladesh's economy is ravaged by the virus and the government had announced a big stimulus package for economic recovery, it needs external budgetary support, he added.

The government had announced a Tk 1.03 trillion, or 3.7 per cent of GDP, stimulus package for the industrial, service and agriculture sectors to cushion the COVID shocks.

Another finance official said since the national budget was under pressure in terms of resources mobilisation, the bank lending would provide a breathing space for the government.

The total deficit in the Tk 5.68 trillion national budget has been estimated at Tk 1.90 trillion, which is 6.0 per cent of GDP. Out of the deficit, Tk 800.17 billion is expected to be financed from external sources, while Tk 1.099 trillion internally.

Following the outbreak of the COVID-19, Finance Minister AHM Mustafa Kamal on March 25 in a video conference requested the WB to extend support, especially to budgetary aid to tackle the pandemic.

Finance officials said if the fund is confirmed, it would be injected into the national coffers directly and would help offset the possible widening deficit of the public expenditure plan.

The Washington-based lender has recently announced that it will deploy $160 billion funds for combating the coronavirus outbreak and recover the economies from the losses across the globe in the next 15 months.