World Bank to give $500 million budget support

The World Bank is considering a $500 million budget support for Bangladesh in the current fiscal year under two programmes, said its Country Director Abdoulaye Seck today.

In the last fiscal year that ended on June 30, the development lender gave $500 million in budget support as well. The fund was part of the green and climate-resilient development policy credit.

"In 2023-24, we may be able to provide the same amount."

Seck shared the information following a meeting with Planning Minister MA Mannan at the planning ministry in the capital.

Currently, the WB is holding talks with the government to provide credits as part of the climate change adaptation programme and the development policy credit.

Seck also said financial sector reforms are happening in Bangladesh and he thanked the central bank for this.

"This is new because it did not happen before," he said, highlighting the disclosure the central bank made in June on the quality of assets in the banking sector.

Seck also praised the central bank's move aimed at bringing reforms to the interest rate regime, calling it fantastic.

"It will be important to make sure that the reform is maintained."

In June, the central bank withdrew the 9 percent interest rate cap on loans. The ceiling was introduced in April 2020.

Mannan said the WB praised the government's reforms on making the bank interest rate market-based.

"However, the World Bank emphasised that there are more steps to be taken in this regard."

The minister said the government is hopeful that the GDP growth will be higher in 2023-2024 than the 5.6 percent expansion projected by the WB.

"However, everything will depend on the situation in the next few months," he said, indicating to the political situation ahead of the next parliamentary election due in January.

"If the situation remains stable, the GDP growth could be 6 percent."

Mannan said although inflation dropped slightly in September, he is not satisfied.

The Consumer Price Index, which measures the monthly change in prices paid by consumers, rose 9.63 percent in September, down 29 basis points from more than a 12-year high recorded a month earlier.

The minister stressed efforts to reduce inflation further as it affects the common people.