Govt to Begin $500M Budget Support Talks with WB

Finance Secretary Dr. Md Khairuzzaman Mozumder announced that the Asian Development Bank (ADB) and the World Bank will provide $600 million and $500 million in loan assistance, respectively, by December 2024.

Bangladesh aims to receive $1 billion from the IMF within this fiscal year, with additional support requested for the ongoing three-year loan program. Finance Secretary Dr. Khairuzzaman Mozumder confirmed that an IMF team will visit Bangladesh on December 4 for final discussions. Additionally, the Asian Development Bank (ADB) will provide $600 million, and the World Bank $500 million in budgetary support by December.

On November 18, 2024, Moody’s downgraded Bangladesh’s long-term sovereign credit rating to B2 from B1, with a "negative" outlook, marking its second downgrade in under two years. The rating agency also lowered GDP growth forecasts for FY25 to 4.5% from 6.3%, citing heightened political risks, weak economic activity, and growing reliance on short-term debt.

Government borrowing in Bangladesh has reached Tk 595.16 billion during the first four months of the fiscal year, primarily to cover budget deficits and repay central bank debts, according to a confidential Bangladesh Bank report. This amount, borrowed via treasury bills and bonds between July and October, resulted in a net borrowing of Tk 204.09 billion.

The World Bank (WB) and Asian Development Bank (ADB) are preparing to offer $1.1 billion in budget support to Bangladesh, with $500 million expected from the WB and $600 million from the ADB. The WB's loans, under the Second Green and Climate Resilient Development Credit programme, are scheduled for approval in December 2024 and include climate-related conditions, such as increasing the climate budget allocation from its current 7.5% of the national budget and ensuring effective monitoring.

At the 29th COP in Baku, Bangladesh and other vulnerable countries are demanding climate finance that doesn’t increase their debt, as wealthy nations continue to fall short on financial commitments. Since 2009, Bangladesh has incurred $12.78 billion in climate debt with limited grants, while per capita climate debt has risen to $80.