WB To Assist Bangladesh In Overcoming Liquidity Crisis

In a bid to address the liquidity crisis affecting the banking sector, Bangladesh has sought financial assistance from the World Bank, which has responded positively.

Finance Adviser Dr Salehuddin Ahmed said this following a meeting with a World Bank delegation at the Secretariat on Tuesday (September 17).

Dr Ahmed said that the World Bank will provide loan support to alleviate the liquidity challenges faced by the banking sector, although the exact amount of assistance has yet to be finalised.  Further discussions are expected to determine the specifics.

Dr Ahmed assured that a substantial amount of budgetary support would be available this year.

The conditions set by the World Bank for receiving this loan are reportedly straightforward and feasible.

The World Bank's seven-member delegation, led by Matthew E Vergins, Country Director for South Asia, met Dr Ahmed at the Secretariat earlier.

It is indicated that to secure a $1 billion loan, Bangladesh must meet four main conditions.

These include establishing a framework for asset management companies to handle non-performing loans of banks and financial institutions, formulating policies to identify the true beneficiaries of loans, defining the scope of forensic audits for banks and financial institutions, and creating a separate department for implementing the rules and regulations set by the Bangladesh Bank.

Of the $1 billion loan, $750 million will be available as policy-based assistance, primarily for budget support. The remaining $250 million will be allocated for investment loans and guarantee facilities.

Experts point to multiple factors behind the current dollar crisis, such as a considerable imbalance between dollar supply and demand, dwindling foreign exchange reserves, insufficient remittance inflows, and reduced export revenues.