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  Financing Policy
The financing policy of BMDF is, indeed, unique in nature. The government of Bangladesh (GoB) receives loan from its development partners through standard bilateral agreement in which the Economic Relations Division represents the GoB. Then, BMDF goes for a subsequent agreement calling it Subsidiary Loan and Grant Agreement with the Bank and Financial Institutions Division of the Ministry of Finance. The terms and conditions of the utilization of the fund are elaborately explained in the agreement. BMDF reviews the project proposals of the ULBs and then allocates fund taking into consideration the amount of grant and the demand of the ULB. The financial packages constitute a blend of grants, loans, and municipality's own contribution for a project. It follows a participatory approach of funding to the ULBs, thereby combining the participation of the beneficiary: the GoB and the donors. The following table highlights category-wise involvement of fund-providers for the infrastructural work of ULBs:  

Description

WB Share

GoB Share

ULB Share

Remarks

Civil Works

90%

-

10%

WB financed by IDA credit of US $ 155 M, ULB deposited US$ 16.50M

Vehicle and Equipment

80%

20%

-

Consultants and Training

100%

-

-

Incremental Operating cost

75%

25%

-

 
 

BMDF is committed to repay the government’s 15% of its total utilized amount. In order to begin a project, 10% of the project cost as matching contribution has to be deposited with a screw account, which is to be operated by the recipient ULB. BMDF bears the rest of the 90% of the project cost. Of this 90%, BMDF provides 80% as grant and 20% as loan to the concerned ULB under Subsidery Loan and Grant Agreement made between the BMDF and Bank and Financial Institutions Division of the Ministry of Finance. BMDF transfers money to the screw account against Bill(s) of work submitted by the recipient ULB for payment to the contractors.