Bangladesh is set to receive a much-needed financial boost, with approximately $1.2 billion expected from four major development partners to support the interim government’s efforts in economic recovery.

According to officials from the Ministry of Finance (MoF), work has already begun to secure this budget-support credit, which is expected to help narrow the income-expenditure gap in the current fiscal year’s budget and improve the country’s foreign exchange reserves.

The World Bank (WB) is anticipated to be the largest contributor, providing $500 million in budget support within the 2024-25 fiscal year. A senior official from the Economic Relations Division (ERD) confirmed this development, noting that these funds are essential for stabilizing the economy.

In addition to the World Bank’s support, the Asian Development Bank (ADB), Bangladesh’s second-largest development partner, is expected to extend $400 million in budgetary support by December 2024.

The Asian Infrastructure Investment Bank (AIIB) is also expected to contribute $200 million, while South Korea is projected to provide an additional $100 million.

The decline in reserves has forced the government to adopt a more cautious approach to spending, particularly concerning imports. This has had a ripple effect on production and the consumer market, exacerbating the country’s economic challenges.

In addition to the $1.2 billion in budget support, the government is also anticipating the disbursement of ongoing support from the International Monetary Fund (IMF). Earlier this year, the IMF provided $1.15 billion in the third tranche of its $4.7 billion loan package to Bangladesh.

The interim government’s 2024-25 fiscal year budget, announced in June, totals Tk 7.97 trillion, with a fiscal deficit of Tk 2.516 trillion. To address this deficit, the government plans to secure 36 percent of the required funds from external assistance, with the remaining 55 percent to be financed through domestic borrowings, 6 percent from national savings certificates, and 3 percent from other sources.