By Jagaran Chakma
World Bank’s dispute with Bangladesh, over funds for the Padma Multipurpose Bridge, has cast a shadow on other projects of the Bank in the country, as the multilateral lending agency has decided to hold back the US$ 1.0 billion budgetary support to Bangladesh for the current fiscal year, sources at the Economic Relations Division (ERD) said on Monday. A meeting was scheduled to be held between the government and the Bank in November. But, the Bank refused to sit down with the government on the issue.
Earlier, the Bank did not show any positive indication on finalising the assured loan, for the Padma bridge, before completion of the ongoing investigation into the alleged graft in the Padma bridge bid process.
Senior officials of the World Bank, in Washington, had made their views known to a Bangladesh delegation, on the sidelines of the World Bank-International Monetary Fund (IMF) annual meeting in September 2011, a top official said.
The Bangladesh delegation, led by finance minister AMA Muhith, had sought support from a World Bank vice-president and a director, to facilitate its promised USD 1.0 billion worth of budgetary support.
Since the government has come under fiscal pressure, due to soaring subsidies on power and energy sectors, the team sought the USD 1.0 billion budgetary support from the global lending agency.ERD sources said that the Bank was not in a position, at this moment, to extend the assistance to Bangladesh, until the allegation of corruption in the Padma Bridge project was resolved.
Bangladesh’s national budget, in the current fiscal year, has come under pressure, due to drying up of expected foreign aid flow, and soaring subsidies. The resource constraints has forced the government to borrow heavily from the country’s banking system. The Bank had earlier committed to provide USD 1.3 billion assistance, on an average, every year, to Bangladesh.Earlier, the Bank had warned the government that if it failed to improve implementation of projects, particularly those with large procurements, the Bank will hold back further funding. The World Bank warning had come in a letter sent to the Economic Relations Division (ERD), on December 4.
On the other hand, a delegation of the International Monetary Fund (IMF), recently, visited Bangladesh and pressed the government, again, to cut subsidy on fuel oil, to get the proposed USD 1 billion credit. The IMF also asked the government to carry out tax reforms, to obtain its loan under the Extended Credit Facility. IMF also said that Bangladesh expected to reach an agreement on the Extended Credit Facility, in the near future, with timely action on subsidy and tax reforms.
The IMF mission observed that the fiscal pressures stemmed mainly from rising fuel imports and the subsidy given on it. The amendment to the value-added tax law is key to tax reforms, it added.
Bangladesh has sought IMF loans, to offset pressure on the country’s balance of payments since 2011.
Source: The Independent
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