Bangladesh would get two more big windows for financing development initiatives, including infrastructure, annually requiring US$7bn to US$10bn for a period of at least next 10 years.
The windows would be opened with the establishment of the proposed BRICS Bank and Asian Infrastructure Investment Bank (AIIB).
They would be complementary to existing development partners already contributing to the country’s development and poverty reduction, World Bank lead economist Zahid Hussain told the Dhaka Tribune. “Their operations will supplement the works of the World Bank.”
He said Bangladesh needs $7 to $10bn investment each year for the next 10 years for its infrastructure to reduce poverty and the whole South Asian region needs $2tn fund every year for the same purpose.
“The funds provided by the World Bank, Asian Development Bank and Islamic Development Bank altogether are not even close to that figure,” he said, adding there is ample scope where the proposed banks could operate.
The World Bank has made a commitment to provide $4.8bn during 2011-15 to Bangladesh and, in this fiscal year, it would provide $1.3bn in different projects.
“World Bank in the last fiscal disbursed $1.8bn credit to Bangladesh, the highest ever in the history of the country,” he added.
Replying to a question, Zahid said the World Bank is not worried about the proposed institutions as they will compliment the development works of the Bretton Woods institution.
China has proposed to float AIIB with a capital of over $1 trillion to fund development projects in the Asian region and it invited Bangladesh to join the bank as a founder member.
Brazil, Russia, India, China and South Africa [BRICS] – five emerging economies – in their summit meeting last month proposed to float BRICS Bank with a capital of $50bn to invest in the development projects.
World Bank wants the new banks to have strict procurement policies to be maintained by them so that no corruption could take place, Zahid said.
About financing in big projects, he said, the World Bank cannot finance big projects like deep sea port but these banks might have the capacity to do that.
“We are financing other projects like port development or roads infrastructure and our investment will be more effective if they invest in such big projects like deep sea port,” he said.
About 80 countries get soft loan from the World Bank and there is a fierce competition to get a pie of the fund, he added. World Bank provides loans for 40 years with a grace period of 10-year and 0.7% service charge.
Padma Bridge
The lead economist said it is not possible for the lending agency to be involved in the Padma bridge project again.
“The government went ahead with the project and some works had already been done. Now, if the World Bank wants to join, the government might have to undo all the works so far completed, and that is practically not possible,” he said.
Meanwhile, the country assistance strategy progress report for Bangladesh for 2011-15 admitted that they would not disengaged anymore with their clients the way they did with Bangladesh after the Padma bridge scam came to surface.
The Independent Evaluation Group of the World Bank referring to the Padma Bridge project said: “IEG found that decisions to disengage have affected Bank-client relationships, resulted in losses of knowledge and momentum, and left important development objectives unaddressed.”
The progress report said to correct deficiencies in its response, the World Bank has determined that, when evidence of corruption comes to light, its response should not be to disengage, but to engage differently.
The World Bank approved the Padma project in February 2011 and after that it received evidence of corruption involving senior public officials and requested that the government takes remedial measures to safeguard project integrity.
The negotiation between the government and the bank for financing the project failed and, in January 2013, the government withdrew its request for the bank’s financing of the project.