A fast-delivery credit of US$600 million has been approved by the Asian Development Bank (ADB) for budget and reform supports to enable Bangladesh weather transitional economic impacts and boost forex reserves.
The Board of the Manila-based lender endorsed Wednesday the assistance the disbursement of which is expected to be confirmed through signing a loan deal early next week, Economic Relations Division (ERD) officials said later in the day.
"Just after signing the loan deal, the money will directly be added to the foreign-exchange reserve. This fund will boost our struggling forex reserves," one ERD official said.
The funds will be utilised to strengthen the capacity of the public sector and conduct some reforms which will help Bangladesh navigate possible impacts after the graduation to developing nation from the world's poor-country club-least-developed country or LDC.
In a press statement the ADB says the $600 million worth of policy-based loan (PBL) to the Bangladesh government will help to conduct structural reforms supporting mobilization of domestic resources, efficiency of public-investment projects, developing private sector, reforming state-owned enterprises, and promoting transparency and good governance.
"ADB's loan promptly responds to Bangladesh's immediate development-financing needs following the political transition.
The reforms target improvements in economic management and governance as well as economic diversification and competitiveness," said ADB Regional Lead Economist Aminur Rahman.
The aid package was developed in close collaboration with the International Monetary Fund, the World Bank, and other development partners, he added.
Bangladesh has been struggling with revenue mobilization, as it possesses the lowest tax-to-gross domestic product ratio in the world, at only 7.4 per cent.
This budget support will help Bangladesh in increasing domestic resource mobilization, improving transparency and accountability, digitalization and green initiatives, rationalizing tax incentives and exemptions, assisting taxpayers to boost tax morale, and improving transparency and efficiency of public- investment projects through increased digitization.
The PBL promotes private-sector development and foreign direct investment by streamlining regulatory environment and creating a level playing field through simplifying business creation and operations.
Over 130 services have been made available in an online integrated platform. These are complemented by improved governance and performance monitoring of state-owned enterprises and streamlined foreign direct investment-approval processes.
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