World Bank plans disbursing $2.03b soft credit to Bangladesh

Advises best use of scarce resources

The World Bank plans to disburse US$2.03 billion to Bangladesh from its low-cost financing-arm International Development Association (IDA) in the current fiscal year, officials have said.

The plan was discussed earlier this month when a team of the Washington-based multilateral lending agency had meetings with Finance Minister Amir Khosru Mahmud Chowdhury in Dhaka.

IDA’s lending terms are highly concessional, meaning that IDA credits carry almost no or low-interest charges. Its funds are allocated to the recipient-countries in relation to their income levels and record of success in managing their economies and their ongoing IDA projects.

Historically, Bangladesh is the second-largest recipient of IDA credits worldwide.

“Our joint objective should be to reach an overall disbursement rate of 25 per cent in FY27, equivalent to US$2.03 billion,” Jean Pesme, World Bank’s Division Director for Bangladesh, wrote in a recent letter to the finance minister in reference to their meeting early September.

He also disclosed the proposed FY27 pipeline for Bangladesh totaling some $2.61 billion.

Mr Pesme further wrote that as the proposed FY27-28 tentative programme would substantially exceed Bangladesh’s performance-based IDA21 allocation, “we will need to make adjustments, including accessing additional IDA windows and reallocating resources from underperforming projects”.

He sought government’s continued assistance in securing the necessary approvals, particularly for operations planned for FY27 Q1 and Q2, to support timely disbursement of the funds.

In FY26, Bangladesh received $1.27 billion from the IDA followed by $2.01 billion in FY25, $1.60 billion in FY24, $1.85 billion in FY23, $1.55 billion in FY22, and $1.30 billion in FY21.

Under the FY27 pipeline Bangladesh is likely to get $59.67 million from IDA for ‘Learning Acceleration in Secondary Education Operation Project’, $95 million for ‘Bangladesh Resilient Urban and Territorial Development Project’, $140 million for ‘Chattogram Water Supply Improvement Project’ and $300 million for ‘Learning Enhancement and Acceleration in Primary Education in Bangladesh project”.

Also, for the ‘Bangladesh One Health Project’, the World Bank may disburse $225 million from IDA, $70 million for ‘Dhaka MRT Development (Line-2) and Institutional Strengthening Project”, $142 million for ‘Bangladesh: Digital Service Transformation for Access and Resilience Project, and $400 million for ‘Bangladesh Strategic Flood Resilience Program’.

Moreover, ‘Bangladesh Coastal Resilience Project’ may receive $230 million, ‘Accelerating Clean Energy Investment Programme (IDCOL Renewable Energy Facility) Project’ may receive $350 million, the ‘PFM Reform Programme for Modern, Transparent, and Inclusive Public Financial Management’ may receive $250 million and ‘Bangladesh Agriconnect’ may receive $350 million.

A senior finance division official told The Financial Express the World Bank gave importance on effective use of IDA resources as the money comes from “generosity” of the member-countries.

He said the World Bank officials also emphasised timely approval for projects so that disbursements can be made as planned.

“World Bank’s low-cost loan and grants help to accelerate socioeconomic growth and reduce poverty in Bangladesh,” he said.

Bangladesh so far has received over $45 billion in commitments from the World Bank’s IDA programme.

Source: The Business Standard