‘It is incumbent on international community to make sure Bangladesh does not slip back’
Within an uncharacteristic gesture of goodwill, the Asian Infrastructure Investment Bank (AIIB) yesterday approved $250 million in loans as budget support to Bangladesh to handle the economic impact of the global coronavirus pandemic.
Unlike the other multilateral lenders, the Beijing-based AIIB typically lends to nations in the Indo-Pacific region on building infrastructure regardless of the state of development.
Bangladesh has recently performed exceedingly well with total annual growth averaging 7.4 per cent during the last five years, said DJ Pandian, vice-president for investment functions at the AIIB.
"It really is incumbent on the international community to come together to ensure that the country does not fall behind but continues to create strides in its development efforts," he added.
The coronavirus pandemic will drive yet another 13 million people into poverty, cut 3.7 million jobs, take budget deficit to as high as 7.5 per cent and inflict the very least revenue lack of 2 per cent of GDP in Bangladesh, warned the Asian Development Bank recently.
Bangladesh is extremely vulnerable to the highly contagious virus given that it has one of the highest population densities in the world, the AIIB said in a statement yesterday.
Nearly 15 per cent of the households continue to stay in poverty, with a higher share of households moving into informal settlements, and a lot more than 80 per cent of the workforce employed in the informal sector, which make it difficult and expensive to keep up social-distancing measures to support the spread of the virus.
The loan, which has been co-financed with the Asian Development Bank (ADB), is aimed at mitigating the adverse effects of the pandemic on the country's poor & most vulnerable, particularly those influenced by job losses in small and medium enterprises and the informal sector, together with strengthen social safety nets.
By March 2021, 15 million poor and vulnerable people, of whom at least 40 per cent are women, will benefit from at least one economic assistance programme, such that national poverty incidence will be maintained at the 2019 degree of 20.5 per cent by June 2022.
At least Tk 17,000 crore, or $2 billion, in loans with subsidised interest will be provided to the affected industries and sectors and micro, small, and medium-sized enterprises by December 2021.
The programme also offers specific targets to aid at least 1.5 million workers, of whom at least half are women, in export-oriented industries by method of providing extended income support.
While the AIIB doesn't have a normal instrument for policy-based financing, it really is extending such financings on an exceptional basis beneath the COVID-19 Crisis Recovery Facility to aid its members on projects co-financed with the World Bank or the ADB.
AIIB's Covid-19 Crisis Recovery Facility, created within the coordinated international response to counter the crisis, comes with an initial size of $5 billion to $10 billion to aid the members' urgent economic, financial and public health pressures and quick recovery from the crisis.
The $250 million the help of the AIIB is section of the Bangladesh Covid-19 Active Response and Expenditure Support Programme.
The Beijing-headquartered multilateral lender happens to be reviewing projects from several members, the statement said.
