AIIB gives Bangladesh $400m as budget support

Staff Reporter :
The Government of Bangladesh on Wednesday signed a budget support loan agreement of $ 400 million with the Asian Infrastructure Investment Bank (AIIB) for the strengthening social resilience program.

Sharifa Khan, Secretary of the Economic Relations Division (ERD), and Urjit R Patel, Vice-President of Investment Operations Region-1 at the AIIB, inked the deal.

The credit will support to advance reforms in Bangladesh’s domestic resource mobilization, improve efficiency and productivity of public spending, and help small businesses under the sustainable economic recovery Program (subprogramme-2).

The Finance Division along with the Financial Institutions Division, National Board of Revenue (NBR), Bangladesh Bank, Programming Division and the Central Procurement Technical Unit (CPTU) has formulated the Sustainable Economic Recovery Program.

The aim of the program is to conduct policy reform for mitigating adverse economic conditions arising from the ongoing global economic recession following the Covid-19 and Russia Ukraine crisis.

AIIB, like other development partners, came forward with a $400 million budget support loan for this mentioned program. The loan will be received in standard terms and conditions of the AIIB lending. The repayment period of the loan is 26 years including 3 years of grace period.

The interest rate of the loan will be Secured Overnight Financing Rate (SOFR) + Variable Spread (1.14 precent). Front end fee is 0.25 percent and the commitment fee on the undisbursed loan amount is 0.25 percent.

Meanwhile, AIIB started investing in Bangladesh from 2016. Till date, AIIB committed $3,037.79 million in investment projects in Bangladesh. In the last 3 years, AIIB provided $1050 million as budget support loan to Bangladesh to strengthen its COVID affected economy. After this fresh loan agreement, the total budget support loan from the AIIB stands at $1,450 million.