The World Bank will support the reform of Bangladesh's banking sector, and is likely to provide a total of $2 billion in support in the current FY25, which would include budgetary support and project assistance.
Martin Raiser, vice-president for South Asia at the World Bank, and Finance and Commerce Adviser Salehuddin Ahmed said on Thursday after a meeting between the two at the latter’s Secretariat office.
Regarding the meeting, Salehuddin Ahmed said: "Discussions covered various topics with the World Bank, such as budget support, health and energy, fertilizer imports, and food self-sufficiency. Issues like post-flood rehabilitation and the Rohingya crisis were also discussed."
Speaking to reporters, the adviser also said: “The reforms undertaken in the banking sector will receive support from the World Bank.”
Furthermore, the adviser stated that the reforms undertaken seemed credible to the World Bank.
“We also discussed issues related to boosting investment in the private sector and addressing various challenges in business and trade. They have assured us of their assistance, and we will receive the necessary support,” he added.
“We talked about support for the Rohingya refugees. The World Bank was very positive about all the proposals we presented, and they provided concrete responses. They assured us that they, along with other stakeholders, would coordinate, and there would be no hesitation in providing necessary funding or assistance.”
He mentioned that the World Bank has been very positive about these matters and that the areas for support are now quite clear.
“The World Bank will also coordinate with other organizations,” he said.
Decision subject to board meeting
On the other hand, after meeting Martin Raiser, vice-president for South Asia at the World Bank said: “The final decision on the loan is made during the World Bank's board meeting. However, the possibility of providing $2 billion in assistance for the current fiscal year is being examined.”
After a meeting with the finance adviser, he also said: “Some of this amount will be given as budget support, while the rest will be allocated to various important projects in the health and energy sectors. Additionally, further support will be provided for other projects based on the needs of the Bangladesh government," he added.
He also mentioned that they are exploring what can be done from the International Development Association (IDA) fund of the World Bank.
Abdoulaye Seck, the World Bank's country director for Bangladesh, also attended the meeting.
Martin Raiser arrived in Dhaka on Wednesday (September 18) for a two-day visit.
He is also slated to meet with Chief Adviser of the Interim Government Dr Muhammad Yunus during his stay.
Foreign loan and reserve
This hope of budgetary support came at a time when the country's foreign exchange reserves started to grow positively and gained stability due to the inflow of remittances.
The central bank on September 17 informed that as of Tuesday, there was $24 billion in reserves.
According to the BPM-6 system of the International Monetary Fund (IMF), the reserve amount is close to $20 billion.
Husne Ara Shikha, executive director and new spokesperson of the central bank said: “Expatriates are sending huge amounts of remittances. This is the major reason for the increase in reserves. This has stopped the decline of reserves.”
She also said the growth of expatriate income increased Bangladesh's foreign exchange reserves and the central bank also thinks the fall in reserves has stopped.
