IFC Finances City Bank to Help Bangladeshi Companies and SMEs Impacted by COVID-19
Bangladesh, July, 19 2020 -
The International Finance Corporation, or IFC, a member of the World Bank Group, is providing a loan of up to $30 million to The City Bank Ltd, a leading private commercial bank in Bangladesh, to provide financing for small and medium enterprises and corporate companies affected by the Covid-19 pandemic. This is expected to help keep their doors open and preserve jobs.
The financing package is part of IFC’s $8.0 billion global Covid-19 fast-track financing facility, which aims to help companies stay in business. An IFC statement said Sunday.
This investment comes under the working capital solutions, or WCS, programme of the Covid-19 response envelope, which provides $2.0 billion globally to emerging-market banks.
This allows them to extend credit so firms can cover expenses and pay their employees.
According to World Bank’s South Asia Economic Focus 2020, growth in the country is expected to slow down to 3.0 per cent in FY20 with declining garment exports, lower private investment growth, and broader disruptions caused by the pandemic.
“IFC played a strong role in strengthening the foreign currency financing ability and offshore banking business of The City Bank,” said Mr Sheikh Mohammad Maroof, additional managing director of The City Bank.
“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.”
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.
“Our experience from past crises has shown that keeping small and medium enterprises solvent is vital to saving jobs and limiting economic damage,” said Wendy Werner, IFC country manager for Bangladesh, Bhutan and Nepal.
“Through IFC’s fast-track COVID-19 facility, we hope to support The City Bank to lend to businesses whose cash flows have been disrupted by the global outbreak,” the IFC top official said.
The International Development Association’s Private Sector Window, or IDA PSW, blended finance facility is supporting IFC’s WCS programme with a first-loss guarantee of up to $215 million in eligible countries, including Bangladesh.
IFC is a sister organisation of the World Bank, member of the World Bank Group and is the largest global development institution focused on the private sector in emerging markets.
It works in more than 100 countries, using capital, expertise, and influence to create markets and opportunities in developing countries.
In fiscal year 2019, IFC invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.
As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyse private sector investment in the poorest and most fragile countries.
Recognising the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals, the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency, or MIGA, private investments.
Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets.