Now $2b loan talks with WB begin

GBNEWS24DESK//

After the International Monetary Fund it is now its sister concern World Bank’s turn to negotiate economic reforms with the government for the prospective $2 billion financial support package sought to help the country weather the global economic turmoil.

For that end, Martin Raiser, the WB’s vice president for the South Asia Region, will be arriving in Dhaka today along with Abduoulaye Seck, the incoming country director for Bangladesh and Bhutan.

“I am glad to be back in Bangladesh and to continue discussing with the government the important reforms that can help the country stay on the resilient and inclusive growth path and create opportunities for the people,” Raiser said in a press release.

During his three-day visit, Raiser, who was last in Bangladesh in September, will be meeting with Prime Minister Sheikh Hasina and Finance Minister AHM Mustafa Kamal along with other senior government officials.

At present, the government is in talks for a support package of up to $2 billion with the Washington-based multilateral lender, which has so has committed more than $37 billion in grants, interest-free and concessional credits to the country.

Of the sum, $250 million would come from the Development Policy Credit (DPC) and $750 million from the Green, Resilient Inclusive Development (GRID) fund.

So far, the WB and the government have agreed on the terms for the DPC, while the conditions for the GRID loan and $1 billion budget support, sought in June to mitigate the effects of the Ukraine war, are yet to be thrashed out.

That will be done with the WB staff mission expected later this month or at the beginning of December.

The government will be pushing for reasonable prior actions given that the country has agreed to enter into a long-term programme with the IMF, The Daily Star has learnt from people involved with the proceedings.

“There will be reforms for the IMF programme. Hopefully, that will sway the World Bank to make the triggers easier,” said an official on the condition of anonymity.

The reforms agreed upon with the IMF pertain to creating additional fiscal space, containing inflation and modernising the monetary policy framework, strengthening the financial sector, boosting growth potential and building climate resilience.

For the DPC, the WB has set 12 conditions that encompass reforms in fiscal policy and the financial sector and setting guardrails to future shocks, according to documents seen by The Daily Star. The government is yet to meet any of the conditions.

“We are hoping to revise down the triggers,” he added.