ADB to provide $500m more as budget support

Bangladesh is likely to get another $500 million worth of budget support from the Asian Development Bank (ADB) within this calendar year as the government has recently completed negotiations in this regard with the lender, officials said on Thursday.

In the first tranche, they said, the Manila-based multilateral development bank has agreed to provide $250 million policy-based loan to minimise deficit in the national budget and facilitate the economic recovery from the impact of the Covid-19 pandemic.

"We've recently completed negotiations for the tranche-1. By the end of this year, we are expecting the remaining tranche-2 of $250 million," said a senior official at the Economic Relations Division (ERD).

"The ADB board is expected to approve the tranche-1 within this month (May), followed by signing the loan deal by next month (June)," he added.

The confirmation of tranche-2 will depend on the reform programmes of the government as agreed in the last meeting, the ERD official said.

Earlier, the ADB had responded quickly to Bangladesh's call during the pandemic period with its highest amount of financial help for facilitating economic recovery from the impact of coronavirus.

It has already provided $500 million worth of budget support in the last year 2021 for facilitating Bangladesh's economic recovery process.

In 2020, the ADB also provided a $500 million countercyclical support facility (pandemic response option) towards immediate budgetary support to the economy in the wake of the pandemic to part-finance incremental health, social and economic expenditures by the Bangladesh government.

Another ERD official said the ADB has recently given some conditions for conducting policy reforms under some ministries for getting its proposed $500 million budget support within this calendar year 2022.

Among the reforms, it stressed the need for improving business climate through bringing necessary policy reforms, including energy and other pricing and subsidy policy etc.

Several ADB missions have already completed their discussions with relevant ministries and agencies of the government of Bangladesh regarding the reforms and implementations of the programmes, the ERD official added.