The government on Monday penned a $250 million loan agreement with the World Bank (WB) as budget support to sustain growth following the Covid-19 pandemic and to enhance resilience to future shocks.
Fatima Yasmin, secretary of the Economic Relations Division at the Ministry of Finance, and Mohammad Anis, acting country director of World Bank's Dhaka office, signed the loan agreement on behalf of the Bangladesh government and the WB, respectively, said a press release issued by the finance ministry on Monday.
In response to the adverse effects of Covid-19, the government has provided stimulus incentives to economically affected industries, the agriculture sector and export-oriented industries and to ensure food security, the government extended the social safety net programmes and employment creation.
The World Bank has agreed to provide $250 million as budget support, titled "Bangladesh First Recovery and Resilience Development Policy Credit", which will play a key role in sustaining the post-Covid-19 economic recovery and development momentum.
The Development Policy Credit (DPC) series in two credits will provide $500 million in two consecutive fiscal years 2021-22 and 2022-23.
The main objectives of the DPC1 are to assist Bangladesh in its efforts to implement budget stimulus for the subsequent recovery of Covid-19 and to enhance resilience to future shocks.
There are two sectoral focuses: a) fiscal and financial, and b) lives and livelihood for a resilient economy.
The interest rate of the above-mentioned loan is 1.25%, and the service charge is 0.75%, and this loan has to be repaid in 30 years with a grace period of 5 years.