Originally posted in The Business Standard on 7 November 2024
WB to guarantee Bangladesh’s energy import payments: Country director
World Bank will be able to provide significant budget support to Bangladesh by December, he says
The World Bank will assist Bangladesh in securing energy from global sources and managing outstanding payments, said its Country Director for Bangladesh and Bhutan Abdoulaye Seck.
Gas shortage is a concern for Bangladesh, and the focus now is on securing it at an affordable price, he said.
“We tell suppliers – global suppliers, ‘Don’t worry, you can ship your gas to Bangladesh. We will back Bangladesh. You will not have any concern about being paid.’
“So, it’s kind of a guarantee…it means that the import price of Bangladesh will really go down,” Seck said during a discussion titled “Bangladesh-World Bank Relations: Way Forward,” organised by the Association of Former Ambassadors at the Foreign Service Academy yesterday.
Regarding the electricity import bills owed to the Adani Group, he said, “I see statements not only from the government but also from Adani. There are certainly many facts and much speculation. What is clear, however, is that there is significant pressure on the government’s ability to honour certain obligations, which is evident across several sectors.
“We have met with the energy adviser and discussed several requests for support from the World Bank.”
He said, “Currently, our focus is on helping Bangladesh secure gas at an affordable price.” There are concerns about whether Bangladesh will be able to pay for all its imports, he added.
Addressing the event as the chief guest, Abdoulaye Seck said, “We’ll be providing support to the country, to the budget and that is backed by reforms in the areas of green growth and environmental sustainability.
“But we would also like to support a number of other interventions. Whether it is about the health sector, whether it is about addressing the flood. We are very confident that with strong economic fundamentals and the right policy adjustment, Bangladesh can return to a strong and sustainable growth path.”
Seck said the World Bank will be able to provide significant budget support to Bangladesh by December.
Criticising Bangladesh Bank’s policy, Seck said, “Forex reserves have declined significantly from over $40 billion two or three years ago. This decline is largely due to a misguided policy by Bangladesh Bank, which tried to defend an unsustainable exchange rate.”
Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said, “We will need to renegotiate and restructure our debt. In this context, the World Bank’s decision to provide budgetary support, rather than project support, is crucial, as it helps bolster reserves and maintain remittance flows. We hope remittances will continue to exceed $2 billion, which will positively impact foreign reserves and the stability of the taka.”
He said this is crucial in light of inflation, which is a major concern for the general public. While significant changes have occurred, ordinary people will evaluate the interim government’s performance based on their standard of living, purchasing power, and similar factors.
Mustafizur also mentioned that the government has established six reform committees, but the concrete actions they need to take will require significant support, including technical, analytical, and financial assistance.
“Domestic resource mobilisation is becoming an increasingly important issue. Digitalising the domestic resource mobilisation system is one potential way forward. Tough decisions will be required, and we hope the World Bank, along with other partners, will help assess the true state of the economy and the necessary reforms,” he added.