$800m budget support: ADB postpones its mission halfway amid unrest

Amid foaming unrest in Bangladesh over students' job quota reform movement, the Asian Development Bank (ADB) has postponed halfway its fact-finding mission on an assured US$800 million worth of budgetary support to the country.

Officials concerned feared that the withdrawal of the mission might delay the disbursements of the loan - a much-expected financing during this crunch time when the country is struggling to keep its foreign exchange reserves stay afloat.

The Manila-based lender had started its mission, meant for exploring the possibilities and necessity of the support, on July 7 last and was supposed to conclude it on July 17 with a wrap-up meeting with the Economic Relations Division (ERD).

The mission kicked off with a courtesy call on the ERD Secretary and had discussions on the issues with different government agencies concerned. However, some of the scheduled meetings were cancelled due to the situation.

"The mission has been suspended in the middle due to the violent situation in the  country. The ADB team returned to Manila before July 17 without holding its scheduled concluding meeting with the ERD," said an ERD official.

The students' movement turned violent by the middle of July.

Officials at the Ministry of Finance (MoF) said the loan is expected to help Bangladesh prepare for facing challenges that might emerge after the country's graduation from the least developed country (LDC) status in 2026.

The ADB has assured of providing the budget support in two tranches - $400 million in FY 2024-25 and another $ 400 million in FY 2025-26 - to facilitate a smooth graduation.

Bangladesh has sought the support also to strengthen its economy, mitigate pressure on the foreign exchange reserves, and increase domestic revenue, officials said.

Another MoF official said the ADB team has met most of their relevant ministries and agencies. However, some scheduled meetings have been postponed due to the emerging situation in the country, he added.

"We're yet to get any information from the development partner about its position on the possible budget support," he added.

According to the MoF, the budget support is supposed to be provided under two sub-programmes, $400 million each, subject to implementing a number of policy reforms, most of which are related to revenue policy.

The mission will first report to the Manila headquarters. If the HQ is satisfied with the report, the preparatory and other missions will come here to confirm the first tranche.

The MoF official said they were expecting that the ADB board meeting would approve the first tranche loan before October this year which has by now become uncertain.

Amid the ongoing forex crisis, the government is desperately searching for external funds to enrich the country's forex reserves.

As part of the effort, the government earlier wrote to the World Bank, Japan, the Asian Infrastructure Investment Bank (AIIB) and some other development partners for providing budgetary support.

Meanwhile, the International Monetary Fund (IMF), under a $4.7-billion loan deal, has provided $1.15 billion worth of Balance of Payment support to Bangladesh in June last.

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