Dhaka wants $2.6b to face pandemic fallout

The Bangladesh government is expecting $2.6 billion in loans, equivalent to over Tk22,000 crore, as emergency budget support, from five development partners to tackle the impacts of the Covid-19 pandemic.

The World Bank, Asian Development Bank (ADB), International Monetary Fund (IMF), Islamic Development Bank (IsDB) and Asian Infrastructure Investment Bank (AIIB) have already started the loan approval process after holding primary discussions with the government.

Besides, the Economic Relations Division (ERD) has sent letters to the Japan International Cooperation Agency (JICA), and a number of other multilateral agencies and countries, seeking assistance to counter the economic fallout of the novel coronavirus.

Speaking to The Business Standard, ERD Secretary Fatima Yasmin said the total amount of loans from the five development agencies can be confirmed within this week.

"We have sought assistance from all development partners and developed countries to manage the coronavirus crisis and recover the country's economy from its impact. A number of organisations have started the assistance process after assuring us of their intention,"she said.

"Some of these organisations will inform us later how much they will provide."

Though the human casualty from the coronavirus in Bangladesh is not yet high, the economic impact of the pandemic is already starting to be felt. Bangladesh's overdependence on apparels for exports is threatening to hurt every sector, be it backward and forward linkage industries or transports, banks, insurance and small enterprises.

As an immediate step, the government on March 26 announced a Tk5,000 crore stimulus to pay salaries of workers in the export-oriented industries. Additional money is being spent to feed the poor and people who became unemployed during the ongoing shutdown.

But that allocation is too small as almost all sectors are seeking government assistance to overcome the unforeseen challenge they are facing. As a result, the government is looking to borrow from its development partners.

According to ERD sources, the World Bank on Friday approved $100 million for Bangladesh as emergency assistance. The Directorate General of Health Services (DGHS) will use the fund to address the Covid-19 crisis.

The ERD expects the World Bank to release the fund soon.

Meanwhile, the ERD has recently sent a letter to the WB seeking an additional $500 million as budget support to help the government meet its additional spending arising from the onslaught of the pandemic.

The letter also requested the agency to release the second installment of $250 million of the previously approved $750 million budget support.

In total, the ERD currently expects $850 million from the World Bank as assistance.

The WB has announced a $12 billion fund to tackle the global coronavirus crisis, which was later increased to $14 billion. The agency's board had also approved a $160 billion fund to help the global economy recover from the impact of the pandemic.

It has so far approved $3 billion in assistance to 25 projects related to the coronavirus outbreak across different countries.

The ADB started assisting Bangladesh on the Covid-19 crisis with a $3 lakh grant to the health sector. The agency has also approved $100 million in emergency loan assistance in this sector.

The ADB Dhaka office and ERD sources have confirmed that a discussion is underway for $500 million in budget support to Bangladesh.

The agency announced a $6.5 billion package for member countries in a bid to counter the Covid-19 threat. The ADB board has already approved assistance to China, Sri Lanka, Philippines, Tajikistan, Mongolia and Bangladesh in the package.

Meanwhile, the International Monetary Fund has announced a $50 billion package to handle the fallout from the global pandemic. Under this package, the IMF will offer lower income countries $10 billion in interest free loans.

Bangladesh is expecting 750 million as assistance from the IMF fund.

Following a special meeting with finance ministers of G-20 countries, IMF Managing Director Kristalina Georgieva said in a statement, "Eighty countries have sought assistance from the IMF to tackle the coronavirus crisis.

"It is coordinating with other agencies to strengthen integrated support activities. The IMF is ready to offer $1 trillion in loans if necessary to counter the coronavirus crisis."

The Islamic Development Bank will provide $150 million to Bangladesh to fight the Covid-19 outbreak, with a breakdown of $100 million from its own fund and another $50 million from its sister concern International Islamic Trade Finance Corporation.

Md Mijanur Rahman, joint secretary and chief of the ERD's Middle East wing, said, "The government asked $150 million from the IsDB and the agency has given initial consent in this regard.

The agency had announced a $2 billion fund for its member countries to fight the coronavirus menace.

Meanwhile, the Asian Infrastructure Investment Bank approved $250 million assistance to Bangladesh on Saturday. ERD officials said aside from financial support, Bangladesh has also sought various types of medical equipment form the AIIB.

ERD officials said the JICA has announced to stand with Bangladesh to counter the Covid-19 threat. The agency will formally announce its amount of assistance in the next few days.

Responding to a query, ERD Additional Secretary Dr Nahid Rashid said, "We have sought assistance from Nordic countries as well. We expect more than $5 million aid from Sweden, Denmark and Norway.