News from Bangladesh Sep 2008

ADB Helps Bangladesh Cope with Rising Food Prices

ADB is helping Bangladesh with $170 million in loan and $600,000 in technical assistance grant to cope with rising food prices. The fund was disbursed in early August after approval by ADB's Board of Directors on 22 July. The assistance is part of the Government's $1.29 billion food security package, supported by ADB and other international agencies.

The assistance helps the Government ensure access to food supply for those hardest hit by recent natural disasters in Bangladesh and the rapid increase in food prices. Bangladesh is the first developing member country to receive ADB support after the announcement made by ADB President Haruhiko Kuroda during the institution's 41stAnnual Meeting in May. ADB will provide up to $500 million immediate budgetary support to the hardest hit countries in Asia and the Pacific, and an increase in lending for agriculture and rural development to more than $2 billion in 2009.

Bangladesh, a net importer of food grains, was severely affected by two floods and a devastating cyclone in 2007, causing a rice production shortfall of 1.2 million tons and adversely affecting the food security of an estimated 25 million people. Rapidly increasing food prices further worsened the situation, seriously affecting the poor and vulnerable and fixed income earners, who allocate about 70% of their total spending on food. In Bangladesh, food inflation now stands at 12%. Out of the country's total population, 40% are now living below the poverty line. The country's per capita gross domestic product currently stands at $554.