Contacts: In Dhaka: S.M.Rezwan-ul-Alam (880-2) 8159001 Ext. 4242 In Washington: Erik Nora (202) 458 4735 enora@worldbank.org WASHINGTON, September 27, 2007 — The World Bank today approved an IDA credit of US$75 million to assist the Government of Bangladesh bridge the resource gap incurred as a result of the 2007 floods. The additional financing to the Fourth Development Support Credit (DSC IV) is designed to meet the unanticipated gap in the government budget that is arising out of flood-related spending. It will also help absorb unforeseen pressure on the foreign exchange reserves that may occur as a result of emergency imports, particularly those related to food. “The magnitude and devastation of the flood and the required response from the government are creating pressure on the budget,” said Xian Zhu, World Bank Country Director for Bangladesh. “This quick disbursing financing will provide resources at a time when the full impact of the disaster on government revenues is unknown, and there is an urgent need for additional government expenditures. It will assist the Government in covering immediate needs for relief, livelihood support, and reconstruction by accessing financial assistance necessary to mitigate the impact of the floods.” These resources will restore a part of the regular non-wage operation and maintenance budget of several ministries that is being used for flood-related restoration and rehabilitation activities. Most of the regular maintenance work programmed for this year will suffer if this is not done, with adverse developmental consequences particularly for the roads, public works, education, and health sectors. A formal damage and needs assessment is expected after the flood waters recede completely, which will provide an estimated measure of total economic losses. From available information, it is already clear that the human, social, and economic impacts are sizeable. Preliminary and incomplete figures indicate an estimated 11 million people affected, and damages to 1 million homes, 1.1 million hectares of crop, and more than 23,000 kilometers of road. “Early estimates suggest that the reconstruction costs of the lost and damaged infrastructure are likely to be at least half that of the 2004 floods, implying more than US$1 billion,” said Zahid Hussain World Bank Senior Economist and project co-team leader. “Emergency import needs, particularly in rice and other food items, and inputs for agriculture and construction can adversely impact the balance of payment position.” Policy and institutional reforms in Bangladesh have been supported by the World Bank through a series of budget support operations, known as Development Support Credits. As part of this series, four credits totaling US$900 million have been provided to Bangladesh since 2003. The last credit - DSC IV- was approved by the World Bank in May 2007. The Additional Financing will allow the Government to continue moving forward on the policy and institutional reform agenda supported by the DSCs. The credit from the International Development Association (IDA), the World Bank’s concessionary arm, has 40 years to maturity, including a 10-year grace period; it carries a service charge of 0.75 percent. - ### - For more information on the World Bank in Bangladesh, please visit: http://www.worldbank.org/bd For more information on IDA impact, visit: http://go.worldbank.org/TAP79WUP80 |
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