The World Bank, ADB, and Japan pledged budget support in exchange for banking and financial sector reforms. While the interim government has launched significant reform efforts, the recommendations from the reform commissions have yet to be implemented. Consequently, even after six months, no funds have been released for budget support by the World Bank, ADB, or Japan.
While it was initially expected that at least $1 billion would be issued by December, the government now aims to receive $2 billion in budget support by June. However, doubts have arisen regarding the realism of this expectation.
According to the Ministry of Finance, after the fall of the autocratic government and the formation of the interim government on August 8, these development partners made several commitments for urgent budget support in meetings with relevant authorities. However, after six months, despite persistent efforts by the government, the funds have not been disbursed.
Sources confirm that the Asian Development Bank (ADB) has agreed to provide up to $1 billion in loans as budget support to Bangladesh by June. However, certain conditions must be fulfilled by the government, including reforms in the banking sector, such as reducing the number of directors and their tenure in private banks. The government is making progress in meeting these conditions, and as part of this, a financial sector reform commission has been established. Moreover, three separate task forces have been set up to strengthen the banking sector, address money laundering, and bring back illicit funds.
Meanwhile, in November, both the World Bank and ADB informed the government of their readiness to propose $1.1 billion in budget support. However, four months later, little progress has been made on this matter.
Separate source from the Ministry of Finance mentioned that while development partners were initially eager to support the interim government, their enthusiasm has significantly waned after six months. There has also been a lack of negotiations from the government's side, leading to a slowdown in the disbursement process. According to the reform proposals from the World Bank, ADB, and IMF, a timeline was set for reducing the number of members on bank boards.
Additionally, to boost the reform and development efforts of the interim government, the World Bank had sanctioned $500 million in budget support, and the ADB had approved $600 million, both of which have not been received yet.
Along with the budget support, the World Bank had also authorized $379 million for health and nutrition initiatives and $280 million for improving the water supply system in Chittagong, both of which were disbursed at that time.
(Translated by Afia Nanjiba Ibnat)
Bd-pratidin English
