Bangladesh, ADB ink $600m loan deal for structural reforms

The Asian Development Bank (ADB) and the government of Bangladesh signed a $600 million policy-based loan (PBL) agreement on Wednesday, aiming to promote structural reforms supporting domestic resource mobilisation and improving the efficiency of public investment projects.

The agreement also focuses on developing the private sector, reforming state-owned enterprises and boosting transparency and good governance.

Secretary of the Economic Relations Division (ERD) Md Shahriar Kader Siddiky and Deputy Country Director of the Asian Development Bank (ADB) Jiangbo Ning signed the loan agreement on behalf of Bangladesh and ADB, respectively, at a ceremony at ERD in the capital.

“The $600 million assistance under the Strengthening Economic Management and Governance Programme (Subprogram 1) supports the government in addressing structural weaknesses in mobilising domestic resources, enabling investment climate, facilitating trade and logistics, and promoting transparency and good governance,” said Deputy Country Director Jiangbo Ning.

He said that the reforms under the program aim to increase income tax revenue by 25%, and value-added tax (VAT) by 30%, while reducing development project cost overruns by 30%, and cutting average time overruns for completed projects to 18 months, by March 2027.

The Strengthening Economic Management and Governance Programme aims to sequentially implement complex reforms focusing on strengthening fiscal management, improving state-owned enterprises’ (SOE) governance and investment climate, and boosting trade policy and logistics.

The overall programme also includes subprogram 2, scheduled for 2026, with another $600 million.

The subprogram 1 supports the government in initiating tax expenditure rationalization, tax administration automation and digitalisation, data transparency, public investment management (PIM) system improvement, SOE governance and fiscal risk monitoring, strengthening regulatory environment streamlining, and trade facilitation.

The subprogram 2 envisages to further deepen the reforms initiated under subprogram 1.

In addition, the PBL aims to facilitate policy and institutional reforms to promote a “whole of government” logistics sector reform to reduce the cost of trade and promote export diversification.