China-backed AIIB approves $250 mn loan for Bangladesh to mitigate COVID-19 effects

China-backed Asian Infrastructure Investment Bank (AIIB) has approved a $250 million loan to Bangladesh to mitigate the adverse effects of coronavirus pandemic. The AIIB said in a statement that the loan is aimed at funding the country’s poor and most vulnerable, particularly those affected by job losses in small and medium enterprises and the informal sector.

“The program also has specific targets to support women in export-oriented industries,” said AIIB, adding that it will also strengthen social safety nets.

The multilateral development bank emphasised that Bangladesh is extremely vulnerable to COVID-19 due to its one of the highest population densities in the world. It highlighted the difficulty of maintaining social distancing measures since nearly 15 per cent of households continue to live in poverty, with a high share of households living in informal settlements.

Read: Super Cyclone 'Amphan' Spent, Speeds Into Bangladesh After Weakening; Rains To Continue

Record job loss predicted

Asian Development Bank, which is co-financing the program, estimated that a serious outbreak would result in job losses ranging from 1.4 to 3.7 million. D.J. Pandian, AIIB Vice President, Investment Operations, said that the support is part of AIIB’s broader proactive efforts to respond to the needs of our vulnerable members to weather the COVID-19 crisis.

“It is incumbent on the international community to come together to ensure that the country does not fall behind but continues to make strides in its development efforts,” said Pandian in a statement, noting that Bangladesh had performed exceedingly well vis-a-vis GDP in the recent years.

The Bank, headquartered in Beijing, said that it is extending the loan on an exceptional basis under the COVID-19 Crisis Recovery Facility to support its members on projects cofinanced with the World Bank or the Asian Development Bank. COVID-19 Crisis Recovery Facility has an initial size of $5-10 billion to support AIIB members’ urgent economic, financial and public health pressures and quick recovery from the crisis.

Read: At Least 19 Mn Children At Imminent Risk Due To Cyclone Amphan In India, Bangladesh: UNICEF

(Image credit: AP)