The International Finance Corporation (IFC), a member of the World Bank Group, is providing a loan of up to $30 million to The City Bank Limited, a leading private commercial bank in Bangladesh, to provide financing for small and medium enterprises (SMEs) and private companies affected by the COVID-19 pandemic. This is expected to help keep them going and preserve jobs.
According to World Bank’s South Asia Economic Focus 2020, growth in the country is expected to slow down to 3 per cent in fiscal 2019-20 with declining garment exports, lower private investment growth, and broader disruptions caused by the pandemic.
The financing package is part of IFC’s $8 billion global COVID-19 fast-track financing facility, which aims to help companies stay in business.
This investment comes under the Working Capital Solutions (WCS) programme of the COVID-19 response envelope, which provides $2 billion globally to emerging-market banks. This allows them to extend credit so firms can cover expenses and pay their employees, according to an IFC press release.
“We believe that the COVID-19 WCS fund has further strengthened our ability to meet our customers’ foreign currency financing requirements in this pandemic where we have experienced contraction in foreign currency liquidity outside Bangladesh,” said Sheikh Mohammad Maroof, additional managing director of The City Bank.
Since 2017, IFC has been a shareholder of The City Bank, a long-standing client of IFC. This financing package will support working capital, trade finance and foreign exchange liquidity needs of sub-borrowers through The City Bank’s offshore banking unit.
The International Development Association’s Private Sector Window (IDA PSW) Blended Finance Facility is supporting IFC’s WCS program with a first-loss guarantee of up to $215 million in eligible countries, including Bangladesh.
