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Bangladesh now on World Bank’s ‘Gap Country’ list

Team due next week to brief officials about blend loan options as LMIC


FHM Humayan Kabir | Published: July 31, 2019 10:06:39 | Updated: July 31, 2019 13:11:40


Reuters file photo

A World Bank (WB) team is coming to Bangladesh next week to apprise the country of its various loan options, as the country graduated to the lower-middle-income country status few years ago, officials said on Tuesday.

Financial experts from the WB headquarters in Washington DC will arrive in Dhaka on August 5 for a two-day visit to educate the government officials on the possible options of its funds from the bank, they said.

A workshop for the civil servants concerned will be held on August 5 in Dhaka, with Additional Secretary of the ERD M Zahidul Haque in the chair.

"Since Bangladesh graduated to the status of lower-middle-income country (LMIC) a few years back, the facilities available on concessional aid for it will be shrinking. On the other hand, the global lender will be increasing the amount of non-concessional loans," said an official of the Economic Relations Division (ERD).

Bangladesh is no longer on the list of recipients of International Development Association (IDA) only country. Now it has been placed as a 'Gap Country' under which it will get loans both concessional and hard terms.

Within a shorter period, the country will be enlisted as the 'blend country'. And as a blend country, Bangladesh will have to borrow funds with harder terms and conditions.

"The concessional loans that Bangladesh has been receiving from the IDA are shrinking day by day while the WB will be enhancing hard-term loans for Bangladesh. At the next workshop to be held in the country, the WB team will highlight different lending options," said the ERD official.

The workshop scheduled for August 5 will focus on the IDA graduation process and rough timeline for Bangladesh, the IDA-18 windows and some other special products, said another official.

Lead Financial Officer Jose F Molina and Senior Financial Officer Farah Imrana Hussain will lead the WB team, he said.

The Washington-based lender has made its lending costlier to Bangladesh from the last fiscal year (FY), 2018-19. After providing concessional support for a long time, the WB has enhanced interest rate and made the terms and conditions harder following the country's graduation to LMIC.

It has also proposed Bangladesh to enter into the WB's costliest lending arm IBRD (International Bank for Reconstruction and Development) to borrow funds if necessary, officials said.

Currently, the WB loan repayment period has been reduced to 30 years and the grace period to five years from 40 years and 10 years respectively.

Until FY2017-18, Bangladesh received soft loans from the WB's concessional lending arm - IDA -- as the "IDA-only" country.

Officials said the WB has now classified Bangladesh as the "Gap Country" in FY 2019 and is lending funds on "Blend terms".

According to the Washington-based lender, if a country's GNI per capita crosses operational threshold for two consecutive years, the borrower will be treated as the "Gap country" for getting its funds.

Meanwhile, Bangladesh graduated as the lower-middle income country with the Gross per capita GNI crossing the $1,046 in FY2016.

The 'Blend terms' means the borrowing country will get loans at both concessional and harder terms. It means Bangladesh will be getting loans from IDA at 0.75 per cent interest rate as well as the interest rates will be varied from 2.0 to 2.62 per cent per annum.

Among the South Asian nations, India and Sri Lanka have already been classified as "graduate countries" and Pakistan as the "Blend country".

kabirhumayan10@gmail.com

 

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