World Bank to provide Bangladesh $250 million as budget support

The World Bank will provide $250 million to help Bangladesh create more and better jobs, recover faster from the Covid-19 pandemic and build resilience to future crises.

This assistance will be given as budget support under the Third Programmatic Jobs Development Policy Credit (DPC- III).

A loan agreement has signed between the Government of Bangladesh and the World Bank in this regard on Thursday.

Fatima Yasmin, secretary of Economic Relations Divisions (ERD), and the Country Director of World Bank in Bangladesh and Bhutan Mercy Tembon signed the loan agreement.

According to ERD, the government has taken initiatives to reform and modernise some policies, strategies and regulations that are conducive to the involvement of various ministries including creating adequate and quality employment opportunities and environment for the working population of the country.

To implement the government's initiatives and the proposed reform plan, the World Bank agreed to provide a total of $750 million in DPC loan assistance as budget support from 2018-19 FY in three consecutive fiscal years.

The main objectives of the programme are modernisation of investment and business environment, strengthening the protection of workers and their capacity to cope with all kinds of shocks and development of polies and programmes to ensure higher access to employment for the vulnerable population.

The global lender set nine conditions in the process including minimising the time for starting a new business, cutting the cost of setting up a business, increasing business registrations, taking less time to complete customs clearance formalities, and raising the number of bond licensed companies outside the apparel sector.

As part of this DPC the World Bank has provided $250 million in FY2018-19 under jobs DPC-1, $250 million in FY 2019-20 under the Jobs DPC-2 and in continuation, $250 million will be provided as loan assistance under the Jobs DPC-3.

Mercy Tembon, country director of World Bank, said, "The Covid-19 pandemic has had a disproportionate impact on the poor and vulnerable population. This financing supports government policies to protect those most affected by the pandemic and create more and better jobs as Bangladesh continues its journey towards its vision of becoming an upper-middle income country."

According to the World Bank, the pace of job creation has slowed in recent years, and the Covid-19 pandemic has exacerbated the situation. Losses in jobs and income put livelihoods of several million at risk in both rural and urban areas. Women and youth have been particularly hard hit.

The Jobs Development Policy Credit series has helped the government protect 5 million jobs, and enabled firms to continue paying their workers' wages. It also supported the migrant workers who have had to return to Bangladesh due to the pandemic. The programme will also support informal micro-entrepreneurs in recovering by extending micro-finance facilities.

Fatima Yasmin, secretary of ERD, said, "The government has taken fast and proactive measures to protect the poor and vulnerable population and to mitigate the adverse impact of the Covid-19 pandemic on formal and informal businesses. This programme has helped protect the jobs and income of poor and vulnerable people while laying the groundwork for building resiliency to future shocks."

The programme has already resulted in reducing costs of starting a business; making the skills development sector more labor-market relevant; strengthening labor regulations for improved working conditions; and promoting quality daycare to enable more women to join the labor force.

The loan from the World Bank is repayable in 30 years with a grace period of five years. The service charge at the rate of 0.75% on the disbursed amount and the commitment charge at the rate of 0.5% per annum of the undisbursed amount have to be paid. The inter rate on the loan is 1.25% per annum.