Up to $1.5b World Bank loans to be repurposed

The government has identified a dozen slow-paced projects funded by the World Bank, from which up to $1.5 billion will be repurposed and utilised as budget support or in other policy-based reform programmes.

A high-ranking official of the finance ministry yesterday said they would finalise in a day or two how much funds from what project will be repurposed.

The official said they were hopeful that the repurposed funds would be available for the new programmes by the end of November this year.

After taking office, the interim government led by Professor Muhammad Yunus sought additional budget support from Bangladesh's development partners, including the World Bank.

The World Bank indicated that it would provide $3.5 billion to Bangladesh to support the interim government's reform initiatives.

Of the figure, $1 billion to $1.5 billion is expected to be repurposed from existing projects, some of which have not been implemented even in a decade.

An official of the Economic Relations Division (ERD) said they had already identified some projects, most of which started more than five years ago but are unlikely to be completed in the next two years.

The official, requesting anonymity, said they held meetings with officials of the relevant ministries and the World Bank to redirect the funds from these projects to other programmes.

They primarily estimated that about $1 billion could be channelled from the identified projects and the figure could even cross $1.5 billion, the official said.

The official also said the decision would be finalised during discussions with the World Bank officials, expected to be held on the sidelines of the World Bank-IMF Annual Meetings in Washington, DC towards the end of October.

Finance Adviser Salehuddin Ahmed and Bangladesh Bank Governor Ahsan H Mansur are likely to attend the talks with World Bank officials.

According to World Bank documents seen by The Daily Star, one of the projects from which funds are likely to be shifted is the Bangladesh Private Investment and Digital Entrepreneurship Programme.

The global lender approved $500 million for the project in 2020.

As of June this year, $432 million of the fund remained unused, whereas the project's deadline is December 2025.

Another such project is the Western Economic Corridor and Regional Enhancement Programme, for which the global lender approved $500 million in 2020.

However, only $58 million of the fund has so far been used.

There are many other ongoing projects, which were undertaken in 2013 but are yet to see full implementation.

During a bilateral meeting with Chief Adviser Prof Yunus on the sidelines of the United Nations General Assembly in New York last month, the World Bank Group President Ajay Banga pledged support for the government's reform initiatives.

In an interview with The Daily Star last month, Martin Raiser, World Bank vice president for the South Asia Region, said the interim government requested budget support for energy and banking sector reforms.

The envelope of fresh money would be about $2.2 billion and include over $1 billion in repurposed loans, while the overall funding would be roughly $3.5 billion, he said.

On repurposing a fund, Raiser said, "Sometimes you also have projects where you thought you wanted to do something – build a particular structure or provide some technical assistance or support a particular policy reform, but the priorities changed, and so you've got $100 million locked up in a project that's no longer part of the priority."

"What you need to do is to change the contract. Once you've changed the contract, you can transfer the money to other projects."

Raiser said all governments have the sovereign right to ask the bank to change the nature of the contract for reallocation.

He added they were trying not to reallocate all the $9 billion undisbursed funds for Bangladesh because some programmes are still relevant, and the World Bank wants them implemented.