The World Bank on Thursday approved a US$250
million financing to help the Government of Bangladesh for strengthening
policies to sustain growth following the COVID-19 pandemic and enhance
resilience to future shocks.
The Bangladesh First Recovery and Resilience Development Policy Credit–
first in a series of two credits– supports fiscal and financial sector
policies to enhance macroeconomic stability and sustain growth.
It supports expanding and modernizing social protection programmes and energy
sector policies to improve efficiency and reduce greenhouse gas emissions.
These actions will help the country to build resilience against future
shocks, including climate change.
“Since 2020, the World Bank has provided over US$3 billion to Bangladesh to
support emergency response, vaccination and other Covid-19 recovery efforts,”
said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan.
“This credit will further accelerate the government’s endeavors to strengthen
its policies and regulatory framework to pave the way for a green, resilient,
inclusive recovery and low-carbon growth,” she added.
The programme supports the development of the National Tariff Policy which
will help modernize trade taxes, said a press release.
New policies also enable foreign firms, including non-resident digital
services companies, such as the search, social media, and cloud services
firms, to submit VAT returns and make payments. Expanded coverage of the
national e-Government Procurement (e-GP) system will increase the efficiency
of public expenditure.
The financing will help streamline the bank recovery framework. All
scheduled banks will prepare recovery plans, which will be updated annually.
New legislation will be prepared to strengthen the stability and efficiency
of payment and settlement systems, which will also foster digital and mobile
financial services.
The programme supports adjustments to the interest rates of several public
savings instruments, bringing them closer to the market to reduce
distortions.
Besides, it will help the government rapidly scale up cash transfer
programmes to respond the future shocks and to expand the use of the
government-to-person payment platform for cash-based programmes.
This will allow the government to respond more quickly to climate-related
crises, including floods and cyclones, by identifying and targeting new and
existing beneficiaries for emergency assistance.
It will also help Bangladesh with its transition to a low-carbon economy.
The revised National Building Code will improve energy efficiency in
buildings while the cancelation of 8,451 MW of planned investment in coal-
fired power generation projects supports progress towards Bangladesh’s
Nationally Determined Contributions (NDC) 2021.
“This financing will help Bangladesh harness digital technology to ensure
green and resilient growth,” said Bernard Haven, World Bank Senior Economist
and Task Team Leader for the project.
“Fiscal and financial sector policies will help sustain growth while
enhancing the coverage and efficiency of social protection programmes will
protect the poor and vulnerable during economic shocks and natural
disasters.” Haven added.
The credit is from the World Bank’s International Development Association
(IDA), which provides concessional financing, has a 30-year term, including a
five-year grace period. Bangladesh currently has the largest ongoing IDA
programme totaling over US$14.5 billion.
The World Bank was among the first development partners to support Bangladesh
and has committed US$35 billion in grants, interest-free, and concessional
credits to the country since its independence.