WB offers help in financial sector reforms; ADB hopes for reserve stabilisation

The World Bank has offered assistance to Bangladesh for reforms in its financial sector, while the Asian Development Bank has expressed the hope that the country's foreign exchange reserves will stabilise.

The country heads of the multilateral lenders separately called on the newly appointed Finance Minister Abul Hassan Mahmood Ali on Thursday (18 January).

The World Bank's offer of assistance comes at a time when Bangladesh is grappling with economic challenges, including a slowdown in growth and rising inflation. The ADB's hope for reserve stabilisation is based on the recent improvement in Bangladesh's balance of payments.

Following the meeting with the finance minister, ADB Country Director Edimon Ginting said he believes that the ongoing reserve crisis will be resolved if the private sector's confidence in the government increases.

He noted that despite some questions surrounding the 12th parliamentary elections held earlier this month, the private sector's confidence is expected to rise after the polls.

The country director of the Manila-based lender said the government has been implementing various policies to overcome the reserve crisis and has the capacity to improve foreign exchange reserves.

In this regard, the private sector will play a major role, he said. He asserted that hopefully, after the elections, the confidence of the private sector will make a comeback.

While it is possible to overcome the reserve crisis in the short term, Edimon Ginting emphasised the need to improve the investment environment in Bangladesh for long-term stability.

He pointed out that the current level of investment in the country is still very low, stressing the importance of attracting much more foreign direct investment (FDI).

The ADB country director said that despite numerous challenges, Bangladesh's economy is in a strong state, achieving a 6% growth rate.

The finance minister said, "I have begun addressing the reserve crisis, tackling the challenges ahead. Efforts are underway to overcome them, and I am also focused on boosting confidence in the private sector."

The minister added, "I have started working to solve the reserve crisis. There are many challenges ahead, and efforts are underway to overcome them. I am also working to boost the private sector's confidence."

Stating that there will be coordination between monetary policy and fiscal policy during his tenure, Mahmood Ali said, "According to the ADB, our GDP growth will be slightly below 6%. However, the multilateral lender believes that growth will increase in the coming days."

Earlier in the day, following a courtesy meeting with Abdoulaye Seck, World Bank country director for Bangladesh and Bhutan, the finance minister said the Washington-based lender would assist in financial sector reforms.

"The World Bank has emphasised the need for reforms in the country's financial sector and expressed its readiness to cooperate in this regard. Simultaneously, it has pledged comprehensive support for economic development," he added.

When asked about specific areas within the banking sector slated for reform, the finance minister, without specifying any particular sector, mentioned that discussions have revolved around comprehensive reform.

Abdoulaye Seck said the World Bank has provided around $52 billion in financial assistance to Bangladesh since its emergence as an independent nation, with an additional $16 billion recently pledged.