WB to provide $250mn loan to Bangladesh as budget support

A loan agreement was signed on Monday between the Bangladesh government and the World Bank (WB) under which the lending agency will provide $250 million as budget support for the “Bangladesh-First Recovery and Resilience Development Policy Credit (DPC1)”.

Economic Relations Division (ERD) Secretary Fatima Yasmin and World Bank Acting Country Director Mohammad Anis signed the loan agreement on behalf of their respective sides.

In response to the adverse effects of Covid-19, the government has provided stimulus incentives to economically affected industries, agriculture sector and export-oriented industries and to ensuring food security, the government extended the social safety net programmes and employment creation, said a press release.

The release said that the World Bank has agreed to provide $250 million as budget support titled “Bangladesh-First Recovery and Resilience Development Policy Credit (DPC1), which play a key role in sustaining the post Covid-19 economic recovery and development momentum.

The DPC series will provide $500 million in two consecutive fiscal years (FY22 and FY23). The main objectives of the DPC1 are to assist Bangladesh in its efforts to implement budget stimulus for the subsequent recovery of Covid-19 and to enhance resilience to future shocks. There are two sectoral focuses: A) fiscal and financial B) lives and livelihood for a resilient economy.

The interest rate of the above-mentioned loan is 1.25 percent and the service charge at the rate of 0.75 percent and this loan has to be repaid in 30 years with a grace period of five years.