Taka depreciation: Bangladesh has to pay IBRD membership fees extra Tk 7cr this year

As Bangladesh is set to pay the International Bank of Reconstruction and Development (IBRD) some Tk 53.15 crore against its shares, the Economic Relations Division has asked the finance ministry to compensate Tk 7 crore as the local currency has undergone major depreciation.

In other words, Bangladesh has to buy dollars at higher prices to pay its dues worth $5.8 million this year, an official of the ERD said.

ERD officials last week sent a letter to the finance division soliciting the extra funds to make up the dues worth $5.8 million. Now, one US dollar is trading at Tk 97.50 in the commercial banks.

An official of the finance division said that usually, the Bangladesh government provides a promissory note to meet the increased share value of global lenders like IBRD which is administered by the World Bank group.

The memo said in the 2022-23 fiscal year, the government allocated Tk 46.15 crore in a special programme fund as a promissory note to meet the demand for an increased share of Bangladesh in IBRD.

In 2018, the Bangladesh government agreed to increase its share under general and selective categories of the capital of IBRD to 1,416. Some 913 share prices worth $21.31 million had already been paid and the remaining 503 shares required a payment of $ 5.84 million.

Former finance adviser to a caretaker government AB Mirza Azizul Islam told Business Insider Bangladesh that additional funds needed to be created to offset extra pressure on the government caused by the increased price of the US dollar.

Not only has the value of the US dollar increased at home but the volume and cost of development projects have also been rising without any question, he said. 

The IBRD is a development bank administered by the World Bank. The IBRD offers financial products and policy advice to countries aiming to reduce poverty and promote sustainable development. The IBRD is a cooperative owned by 189 member countries. It lends to the governments of middle-income and creditworthy low-income countries. To join the IBRD, countries must first be members of the International Monetary Fund (IMF). Bangladesh has not borrowed any money, so far, from IBRD. 

ERD is one of the important Divisions of the Government of Bangladesh which mobilises external resources for the socio-economic development of the country. ERD leads as the focal point of the Government for interfacing with the development partners as well as for coordination of all external assistance inflows into the country.