World Bank Country Director for Bangladesh Xian Zhu said the spike in food prices, compounded by rising prices of other commodities, has pushed over four million Bangladeshis back into poverty. He said the credit will help reduce the pressure on the budget and ensure continuation of the government's social protection programmes, designed to the help the poorest people deal with rising food costs.
According to a World Bank projection, the food price shock has increased Bangladesh's poverty rate by about three percentage points.
It also found that nearly eight per cent of the surveyed households pulled their children out of schools to get jobs to assist their families cope with the crisis. In addition, many poor households have cut their food intake.
Bangladesh government has allocated 800 million dollars in its FY09 budget to deal with this crisis. These measures include making food grain, particularly rice, available to poor people at subsidised prices, scaling up existing safety net programmes, setting up a new employment guarantee scheme to help people in poor areas, and increasing the country's strategic food reserves.
The Bank is also providing ongoing assistance to strengthen Bangladesh's social safety net programmes, including a new 100-day employment guarantee scheme that started on Sep 15 this year.
Meanwhile, the country has taken several actions over the last 15 years that have strengthened the safety net system. For example, the country is gradually moving to cash-based safety nets to avoid both inefficiencies and possible diversion of funds along the complex procurement, storage, and distribution chain.
NGOs and development partners are helping maintain oversight of many of the safety net programmes.