B Mirror Desk : Bangladesh is poised to receive $1.4 billion in budgetary assistance from the World Bank and the Asian Development Bank (ADB) for the ongoing fiscal year. Officials from the Economic Relations Division (ERD) have indicated that loan agreements are anticipated to be finalized by June, with both development institutions already affirming their support.

The budgetary aid had faced delays due to uncertainties regarding the release of the 4th and 5th tranches of the International Monetary Fund’s (IMF) $4.7 billion loan. However, with renewed optimism regarding IMF disbursements in June, discussions with the WB and ADB have recommenced.

ERD officials mentioned that efforts are in progress to finalize the budget support agreements following positive signals from the IMF. A negotiation meeting was conducted yesterday at ERD for a $500 million loan under the ‘Resilience and Recovery Development Policy Credit-II’ program, involving representatives from ERD, the Finance Division, and the WB. Earlier on Tuesday, two separate negotiation sessions were held with the ADB, resulting in Bangladesh securing commitments of $500 million for the ‘Banking Sector Reforms Subprogram 1’ and an additional $400 million for the ‘Climate Responsive Inclusive Development Program (CRID) – Subprogram 2.’ A senior ERD official, speaking on condition of anonymity, informed The Business Standard that multilateral agencies generally seek the IMF’s insights before sanctioning any loans, as the IMF produces diagnostic reports that detail the macroeconomic conditions of its member nations, including evaluations of a country’s external debt status and its ability to repay.

Development partners, including the World Bank and others, give significant weight to IMF debt reports when making decisions about loan approvals. Essentially, multilateral development partners typically refrain from extending loans without the IMF’s endorsement,” he noted. The official further explained that while this stipulation does not officially apply to bilateral development partners, nations such as Japan often adhere to this practice. To date, Bangladesh has secured $1.2 billion in budget support for the current fiscal year.

This amount comprises $500 million from the World Bank through the ‘Second Bangladesh Green and Climate Resilient Development Policy Credit’ agreement signed in December 2024, $600 million from the Asian Development Bank in May under the ‘Strengthening Economic Management and Governance (Sub-Program-1),’ and $100 million from the OPEC Fund in April as part of the same governance initiative.

According to estimates from the Economic Relations Division, Bangladesh is projected to receive a total of $2.6 billion in budget support this fiscal year, marking the highest amount ever received in a single year, surpassing the previous record of $2.59 billion set in FY2021-22. Furthermore, ERD officials indicated that a $500 million initiative titled ‘Strengthening Governance and Institutional Resilience’ is currently under negotiation and may be finalized in the upcoming fiscal year. Additionally, talks are ongoing with Japan regarding a $418 million Development Policy Loan focused on economic reform and climate change resilience. Another $300 million from the Asian Infrastructure Investment Bank is also being discussed under the ‘Climate Resilient Inclusive Development Program (Subprogram-2).’