Bangladeshi Prime Minister Sheikh Hasina holds a joint press conference with her Japanese counterpart at the latter's official residence in Tokyo, Japan, 26 April 2023. EFE-EPA/FILE/KIMIMASA MAYAMA / POOL

World Bank gives Bangladesh $2.25-billion development loan

Dhaka, May 2 (EFE).- The World Bank has agreed to provide Bangladesh a $2.25-billion loan for its five development projects on regional trade and connectivity, disaster preparedness, and environmental management.

Bangladesh’s Economic Relations Division secretary and World Bank country director signed the agreements in Washington with Bangladesh Prime Minister Sheikh Hasina present on Monday.

Hasina is in Washington celebrating Bangladesh’s 50-year partnership with the World Bank.

Under the agreements, the World Bank will finance $500 million in the Resilient Infrastructure Building Project (RIVER) and $250 million in Bangladesh Environmental Sustainability and Transformation (BEST) project, $753.45 million in Accelerating Transport and Trade Connectivity in Eastern South Asia (ACCESS)-Bangladesh Phase-1 project, $500 million in First Bangladesh Green and Climate Resilient Development (GCRD), and $250 million in Sustainable Microenterprise and Resilient Transformation (SMART) projects.

The RIVER project will be the first investment program to support the Bangladesh Delta Plan 2100, the World Bank said in a separate statement.

The other projects are related to improving Bangladesh’s capacity in environmental management and reducing pollution discharges, increasing Bangladesh’s trade connectivity, and building climate resilience.

Bangladesh is getting four loans out of five from the regular International Development Association.

Regular IDA loans are to be repaid in 30 years, with a grace period of five years.

The Bangladeshi authorities said a service charge of 0.75 percent per annum and an interest rate of 1.25 percent shall be paid on the withdrawn amount.

The World Bank has been among the first development partners of Bangladesh, which in the past five decades has committed to the country over $40.5 billion in loans and $722 million in grants under 368 projects or programs.

With more than $16.3 billion commitment to ongoing programs, Bangladesh currently implements the largest IDA country program globally, according to the World Bank.

On Jan. 30, the International Monetary Fund Executive Board approved a $4.7 billion loan package for Bangladesh amid a worrying state of the economy.

As part of the 42-month borrowing package, Bangladesh will get $3.3 billion under the Extended Credit Facility and the Extended Fund Facility arrangements.

The IMF board also approved $1.4 billion under the newly created Resilience and Sustainability Facility for Bangladesh, making it the first Asian country to access the fund.

Bangladesh has been facing multiple economic challenges, with inflation jumping from 5.86 percent in January 2022 to 8.57 percent a year later.

The authorities raised fuel prices by almost 51 percent in August, which drove inflation to a nine-year high of 9.52 percent that month.

The IMF said the Russia-Ukraine war had interrupted Bangladesh’s robust economic recovery from the Covid-19 pandemic.

It has led to a sharp widening of the current account deficit, depreciation of Bangladeshi currency, the taka, and a decline in foreign exchange reserves.

The country is facing a severe dollar crisis, with the foreign exchange reserves dropping to $31.142 billion in March 2023 from $44.146 billion in March 2022. EFE