The government has sought US$500 million budgetary support from the World Bank to help finance the annual public expenditure, officials said on Friday.
The Economic Relations Division, or ERD, has recently requested the Washington-based lender to offer the money to avoid budget deficit during the fiscal year, 2019-20 to swell in the aftermath of Covid-19 outbreak, an ERD official said.
The ERD official said since the government needs more cash to minimise the negative impact of the pandemic on the economy, the agency has sought the fund.
Last month, in a video conference with the World Bank senior officials, finance minister AHM Mustafa Kamal sought extended support from the lender.
"Our finance minister has recently requested the World Bank to extend support. After the minister's request, we have recently sent a formal letter to the bank to help us meet our fiscal target," said the senior ERD official.
If the fund is confirmed, it would be injected into the national coffer directly and would help offset the possible widening of budget deficit, he added.
The government has already announced a Tk 727.5 billion, nearly 2.5 per cent of GDP, stimulus package for businesses. The budget support is seen crucial in the face of lower revenue collection, export earnings and remittances inflow.
Economists fear a ballooning budget deficit in the aftermath of the pandemic.
In the Tk 5.23 trillion national budget for FY2020, the budget deficit is projected at Tk 1.45 trillion, or 5.0 per cent of GDP.
To meet the budget deficit, it planned to secure Tk 680.16 billion from external sources and Tk 773.63 billion from the domestic sources.
But the shortfalls in revenue, exports and remittances threaten to upend the fiscal balance.
According to the National Board of Revenue data, the authority collected Tk 1.45 trillion taxes against the target of Tk 1.90 trillion, leaving a shortfall of Tk 450 billion during the first eight months of the current fiscal.
The budget aims to improve infrastructure, develop human resources while achieving 8.2 per cent economic growth.
"Since the pandemic could deal a blow to the economy, we need huge investments to weather the crisis. So, we have sought the budgetary support from the bank," a joint secretary at the ministry of finance told the FE.
He said there is no alternative to securing external resources to meet the financing gap in the budget as the government had no plan to cut its development expenditure.
"The bank is one of our best partners in supporting the government development plans and. We are hopeful of getting the support soon," said the official.
The WB has recently approved $100 million worth of funds from its fast-track facility to help Bangladesh respond immediately to the pandemic and rehabilitate its ailing health facilities.
Besides, it has called upon Bangladesh to divert less-important and unutilised funds from the ongoing development projects to bankroll high-priority projects.
The Washington-based lender has recently announced it will deploy $160 billion funds in next 15 months to combat the coronavirus outbreak, helping the economies recover from the losses.