The government has requested the World Bank, or WB, to disburse US$250 million as budgetary support within this fiscal from the $750 million the global lender had pledged to offer as development support credit, an official said on Saturday.
The Economic Relations Division, or ERD, has recently urged the Washington-based lender to release the loans as Bangladesh seeks to cushion the economic blow in the aftermath of coronavirus outbreak.
Since the fund disbursement is being delayed, the division has asked for the release of the budgetary support on an emergency basis, said a senior ERD official.
The budget aid, the second tranche of the $750 million development support credit the WB committed in 2018, is supposed to be extended during the fiscal year, 2019-20 provided the government complies with terms and conditions.
Bangladesh received the first tranche worth $250 million in early 2019.
"We've recently requested the World Bank to disburse the 2nd tranche of the budgetary support within this fiscal," said ERD's additional secretary Shahabuddin Patwary.
Since the coronavirus impact could widen the budget deficit in the current fiscal, the division has requested the early release of the fund, he told the FE.
Bangladesh's economy has been facing the virus headwinds as exports of ready-made garment and remittances fell in the past few months.
Officials of the ministry of finance fear that the budget deficit could exceed the traditional 5.0 per cent benchmark of GDP (Gross Domestic Product).
The ministry has already started looking for the overseas funds from some multilateral agencies like the WB and IMF in an attempt to bankroll the deficit budget.
Of the Tk5.23 trillion national budget for the current fiscal, the deficit is projected at Tk 1.45 trillion, or 5.0 per cent of GDP. The authorities aim to secure roughly Tk 680.16 billion will come from external sources and Tk 773.63 billion from the internal sources to finance the gap.
According to the Finance Ministry officials, they have already sought budgetary support from the WB and IMF for the FY2021 fearing the huge pandemic blow to the economy. MrPatwary said the disbursement of the second tranche was delayed as the government could not meet some terms and conditions imposed by the WB.
"Now that the coronavirus issue has become pressing, we have requested the WB to relax some conditions so that we can get the money within this fiscal and the rest in the next fiscal," he said.
Since the government has imposed countrywide shutdown to slow the spread of the virus since March 26, he is hopeful that the WB would consider the issue and make a positive response within the shortest possible time. The budget funds will be helpful for the government to bankroll the deficit financing in this difficult situation, Mr Patwary said.
