$300m WB loan soon for export sector, market infrastructure

The World Bank will lend US$ 300 million soon to facilitate long-term financing for the country’s export-oriented manufacturing sector and to strengthen financial market infrastructure, sources in  the finance ministry and Bangladesh Bank said.

The support from the multilateral lending agency will come under ‘Bangladesh Financial Sector Support Project’.
Officials concerned in the economic relations division of the finance ministry said they were expecting to ink the deal with the WB as soon as April, so that loan disbursement can take place from the next fiscal year.
Finalisation of proposals under the US$ 360 million project, US$ 60 million of which will be arranged from the national budget, is progressing fast, a senior ERD official said.
Of the total US$ 360 million, US$ 260 million will primarily be earmarked to support long-term financing of export-oriented industries, US$ 95 million will be spent to strengthen financial market infrastructure, US$ 4 million for strengthening the financial sector regulators and the remaining US$ one million will be spent on project implementation and monitoring purposes.
The components of the project on long-term financing will extend low-cost loans to manufacturing industries through local financial institutions.
The Bangladesh Bank will administer the regulations and prepare operational modalities so that export-oriented industries get the advantage of the programme, a senior finance official said.
The financing facility will continue for five years after its launching date, he added.
A similar programme has been in place for the last couple of years in the country, but the initiative is plagued due to unavailability of cheap funds, sources said.
‘The programme will patronize
industrial initiatives in the country, as both the WB and the government are of the view that higher cost of fund pushes up expenditure of manufacturing  units,’ a BB official said.
Strengthening financial market infrastructure, another project component involving US$ 95
million is aimed at improving dynamics of the financial sector through modernisation and reforms to bring about qualitative changes in the market infrastructure, sources said.
The major features under the component include development of payment and settlement system, expanding and modernising the credit information bureau, strengthening the systems of the Bangladesh financial unit and integration with systems of other stakeholders and strengthening the IT governance and IT management of
the BB and optimising the IT assets of the BB, according to a government document.
‘The project will lead to strengthening of the financial market infrastructure to enable a large scale
shift to electronic payments in Bangladesh in general and in particular for government payments, enhancing the coverage of CIB by including credit information of the microfinance sector,’ the document reads.
Source: New Age

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