Bangladeshi poor to benefit from $130 million World Bank loan

The World Bank has approved a $130 million loan to Bangladesh in response to the global food crisis which has crippled the ability of millions of the country’s poor to fend for themselves, the international financial institution announced today.

The financing is designed to ease the pressure on Bangladesh’s current budget which is staggering under the pressure of ballooning food-related spending, including social programmes aimed at protecting the vulnerable.

“The spike in food prices, compounded by rising prices of other commodities, has pushed over 4 million Bangladeshis back into poverty,” said the World Bank Country Director, Xian Zhu.

The food price shock has increased the rate of poverty in Bangladesh – which has a population of over 150 million – by around three per cent, forcing almost 8 per cent the households surveyed to pull their children out of school to help their families cope with the crisis, according to World Bank projections.

The impact that rising food and commodity prices has on the country’s poor was highlighted at the General Assembly high-level debate last month by Fakhruddin Ahmed, who serves as head of his country’s caretaker Government.

“For a country like Bangladesh, where roughly 40 per cent of the population lives below the poverty line and where poor households spend as much as 70 per cent of their income on food items, such a steep increase in food prices has had significant adverse effects on food security, poverty and human development,” Mr. Ahmed told the annual debate.

The Government has allocated $800 million in its 2009 budget for measures to cope with the crisis, including making food grain – particularly rice – available to poor people at subsidized prices. It will also set up an employment guarantee scheme to help people in poor areas, as well as increase the country’s strategic food reserves.

“It is critically important to help Bangladesh cope with this crisis,” said the World Bank Lead Economist and project task team leader, Vinaya Swaroop.

“In the absence of concessionary financing resources, the Government would need to curtail development spending or other pro-poor programmes in order to sustain its increased social spending,” the economist added.

“This credit will help the Government to respond to immediate crisis-related needs while protecting other programmes to promote growth and poverty reduction.”