The World Bank has inaugurated a novel financing avenue, granting Bangladesh access to 10 per cent of its untapped loan portfolio for urgent use during emergencies. Officials from the Economic Relations Division (ERD) revealed that this provision could translate to USD 847 million, considering the committed loans from the previous fiscal year. However, the sum could escalate further when factoring in the undisbursed funds from the ongoing fiscal year.
Dubbed the Rapid Response Option (RRO), this feature forms a component of the World Bank's recently sanctioned Crisis Preparedness and Response Toolkit. Designed to facilitate swift reallocation of existing balances within the World Bank portfolio during crises like natural calamities, health crises, or conflicts, the toolkit aims to bolster nations' capacity for rapid emergency responses.
In April, the World Bank communicated this initiative to Bangladeshi Finance Minister Abul Hassan Mahmood Ali, inviting the country to formalize its participation in the "Rapid Response Option." This development arrives as a welcome addition to Bangladesh's foreign exchange reserves, following the recent decision by an IMF team to disburse USD 1.15 billion, nearly double the initially scheduled amount, as part of its USD 4.7 billion loan package.
The introduction of this innovative scheme, offering enhanced flexibility, serves as a valuable complement to existing mechanisms. It empowers governments to swiftly deploy resources during times of crisis. However, certain prerequisites, such as signing an agreement with the World Bank beforehand, must be fulfilled to access these funds.
