AIIB is likely to provide $250 million in budget support

Asian Infrastructure Investment Bank (AIIB) would provide Bangladesh roughly Tk 25 billion ($250 million), or almost as much, as budget support to help the country navigate through the current economic crisis.

According to officials in the finance ministry, the bank will begin loan negotiations with Bangladesh this week and has already given a summary of the loan agreement to the Prime Minister's Office (PMO).

After receiving PMO clearance of the summery, the loan contract might be signed this week, according to other sources.

Bangladesh has sought budget support from the IMF, the World Bank, Asian Development bank (ADB) and some other development partners.

IMF will extend $4.5 billion loan support to Bangladesh to fix balance of payment (BOP) problem. The loan will be available in seven installments with first installment coming in February.

Besides, the government has sought $500 million from the World Bank, but the agency has not yet confirmed when the loan will be available. In addition, ADB is giving $250 million loan as budget support.

The AIIB’s $250 million will bear 3 percent interest, which will have to be repaid in 20 years, including three years grace period. The AIIB’s loan will be utilized for economic recovery.

Economic Relations Division (ERD) has already taken necessary preparation for signing the loan contract, ERD officials said, adding that the credit deal will be signed after getting PMO’s approval.

Once the loan is available, the total loan from the newly formed AIIB will surpass $1 billion for the first time. Bangladesh has so far received $800 million loan from AIIB formed with the initiative of China in 2016.