WB offers Bangladesh additional funds

The country can receive extra $300 million

The World Bank (WB) has offered Bangladesh scale-up credit in the form of additional funds for IDA (International Development Association), according to the sources at the finance ministry.
 Subash Chandra Garg, WB executive director for Bangladesh, Bhutan, India and Sri Lanka, wrote to finance minister AMA Muhith on March 11 this year regarding the scale-up facility (SUF).
He wrote that Bangladesh, being an IDA country, will be able to borrow under this facility only at a fixed rate. The fixed rates indicated for the current period are 3.74 per cent for SDR and 4.19 per cent for USD-denominated loans.
Compared to the credit being received by Bangladesh at present—at only 0.75 per cent service charge—this will raise the cost of borrowing for Bangladesh four to five times for the maturity credits.
Under this facility, Bangladesh can receive a maximum amount of USD 300 million by 2017. But this facility will not be available for a long period.
Officials at the finance ministry told The Independent that the government is yet to take any decision on whether it will accept this offer or not.
The WB has decided to offer this facility as the international community has pointed out that addressing the infrastructure gap—estimated at USD 1.0–1.5 trillion annually for developing countries—and other strategically important investments will be a key to overcoming growth and poverty reduction bottlenecks.
In this context, the IDA partners have affirmed the need for innovation and welcomed further exploration of options that best support the evolving client base of the IDA for the new and more ambitious development paradigm.
Recent developments are indicative of very constrained financing for IDA clients during the IDA17 period, thus underscoring the urgency to identify additional innovative financing options.
To respond to these immediate pressures, the WB has proposed to establish a facility to scale up IDA financing for the remainder of the IDA17 period. This facility will make available up to USD 5.0 billion to IDA countries on a one-off basis.
Of this amount, a contingent amount of up to USD 900 million would be used to replenish the Crisis Response Window (CRW), which has already been depleted in response to the Ebola epidemic and the Nepal earthquake.
The remaining USD 4,100 million, along with any unused portion of the CRW resources, will be made available to IDA countries on non-concessional terms (similar to those from the International Bank for Reconstruction and Development IBRD).
These resources will be in addition to the regular concessional allocations (core and non-core) to IDA-eligible countries in FY17.
Submissions from the regional units of the WB show that the indicative demand from IDA clients for projects that could be financed with non-concessional resources from the facility far exceeds its expected volume.

WB offers Bangladesh additional funds

The country can receive extra $300 million

The World Bank (WB) has offered Bangladesh scale-up credit in the form of additional funds for IDA (International Development Association), according to the sources at the finance ministry. Subash Chandra Garg, WB executive director for Bangladesh, Bhutan, India and Sri Lanka, wrote to finance minister AMA Muhith on March 11 this year regarding the scale-up facility (SUF). He wrote that Bangladesh, being an IDA country, will be able to borrow under this facility only at a fixed rate. The fixed rates indicated for the current period are 3.74 per cent for SDR and 4.19 per cent for USD-denominated loans. Compared to the credit being received by Bangladesh at presentat only 0.75 per cent service chargethis will raise the cost of borrowing for Bangladesh four to five times for the maturity credits. Under this facility, Bangladesh can receive a maximum amount of USD 300 million by 2017. But this facility will not be available for a long period. Officials at the finance ministry told The Independent that the government is yet to take any decision on whether it will accept this offer or not. The WB has decided to offer this facility as the international community has pointed out that addressing the infrastructure gapestimated at USD 1.01.5 trillion annually for developing countriesand other strategically important investments will be a key to overcoming growth and poverty reduction bottlenecks. In this context, the IDA partners have affirmed the need for innovation and welcomed further exploration of options that best support the evolving client base of the IDA for the new and more ambitious development paradigm. Recent developments are indicative of very constrained financing for IDA clients during the IDA17 period, thus underscoring the urgency to identify additional innovative financing options. To respond to these immediate pressures, the WB has proposed to establish a facility to scale up IDA financing for the remainder of the IDA17 period. This facility will make available up to USD 5.0 billion to IDA countries on a one-off basis. Of this amount, a contingent amount of up to USD 900 million would be used to replenish the Crisis Response Window (CRW), which has already been depleted in response to the Ebola epidemic and the Nepal earthquake. The remaining USD 4,100 million, along with any unused portion of the CRW resources, will be made available to IDA countries on non-concessional terms (similar to those from the International Bank for Reconstruction and Development IBRD). These resources will be in addition to the regular concessional allocations (core and non-core) to IDA-eligible countries in FY17. Submissions from the regional units of the WB show that the indicative demand from IDA clients for projects that could be financed with non-concessional resources from the facility far exceeds its expected volume.