Economy
9 days ago

BANKROLLING BANGLADESH'S LDC GRADUATION NEEDS

WB offers budget support credit for smooth transition

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Bangladesh expects US$300-500 million in fresh budget support from the World Bank as the WB has offered the credit to assist with its smooth graduation from the least-developed country (LDC) status in November next year, officials say.

A delegation of the World Bank made the overtures at a recent meeting with commerce ministry officials, they say.

A senior Finance Division official has told The Financial Express the government expects $300-500 million in budget support for the LDC graduation-linked transition and related programmes of the commerce ministry.

The multilateral lender will soon field a mission to discuss the details of the lending programme and possible terms and conditions, a senior commerce ministry official has told The Financial Express.

He says World Bank officials during the recent meeting discussed reforms in the Bangladesh Trade and Tariff Commission and trade policy, and providing policy assistance for private-and public-sector investments, among others.

"They also discussed assisting with paperless business and boosting cross-border trade," says the official.

He further says the area of work under the proposed budget-support programme will be finalised once the World Bank mission comes for detailed discussions.

Presently, the commerce ministry is implementing a World Bank-funded project named Export Competitiveness for Jobs (EC4J).

The project supports meeting export-diversification targets to enhance the growth and competitiveness of the selected sectors beyond apparel, as well as create more and better job opportunities.

The Bank has provided $100 million in loans for the project, which focuses on four priority sectors - leather and leather goods, footwear, light engineering, and plastics - where Bangladesh has demonstrated comparative advantages.

Commerce Secretary Mahbubur Rahman told The Financial Express Monday he had requested the World Bank team to make needs assessment through discussions with the Planning Wing.

He said a World Bank programming mission would visit the ministry in a week or two to make the needs assessment before taking forward the discussion.

"Once we can determine the needs, the Finance Division will then take forward the budget-support issue," said Mr Rahman.

Bangladesh is scheduled to graduate from the LDC group in November next year.

Thereafter, it will forfeit many tariff preferences in the developing and developed worlds.

The local industry is then feared to face severe challenges as subsidies and export incentives will also go.

Bangladesh received more than $1.0 billion in budget support from the Washington-headquartered development financier in the past fiscal year (2024-25).

The funding is tied to a number of reforms, including strengthening financial stability, public-sector performance, and resilience against climate change, among others.

In October, at the annual meetings of the World Bank and the International Monetary Fund, a Bangladesh delegation led by Finance Adviser of the interim government Dr Salehuddin Ahmed may seek increased budget support from both agencies for the current fiscal year, according to officials.

syful-islam@outlook.com

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