A budget-support credit worth US$600 million is confirmed by the Asian Development Bank (ADB) that will directly be fed into Bangladesh's foreign-exchange reserves for a much-needed boost.
The development funding, signed and sealed Wednesday, is meant for facilitating structural reforms in the country to drive economic advances by navigating recent setbacks.
Within a couple of days the loan is expected to be disbursed, Economic Relations Division (ERD) officials said about the urgency of the funding.
The money will go for structural reforms supporting domestic resources mobilization, efficiency of public-investment projects, developing private sector, reforming state-owned enterprises, and boosting transparency and good governance.
Secretary of the ERD Md. Shahriar Kader Siddiky and Deputy Country Director of the ADB Jiangbo Ning signed the loan agreement Wednesday in Dhaka.
The government is committed to boosting its income-tax revenue by 25 per cent and value-added tax (VAT) by 30 per cent through execution of the reform recipe by March 2027.
Besides, it is also committed to reducing the development-project cost-overruns by 30 per cent, average time-overruns for completed projects to 18 months.
Under the lending package, the strengthening of economic management and governance programme (Subprogram-1) has been developed by the Finance Division for "bringing policy reforms to strengthen economic management and establish a transparent and accountable regulatory regime for private-sector development", the ERD says about the objective.
The programme will be implemented by Finance Division and Financial Institutions Division, Bangladesh Investment Development Authority and Public-Private Partnership Authority, Bangladesh Competition Commission and Registrar of Joint Stock Companies and Firms, Programming Division of the Planning Commission, the National Board of Revenue and the Bangladesh Bank.
"The $600 million assistance under Subprogram-1 supports the government in addressing structural weaknesses in mobilizing domestic resources, enabling investment climate, facilitating trade and logistics, and promoting transparency and good governance," said the ADB Deputy Country Director, Jiangbo Ning, after the deal-making.
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.
Meanwhile, the Asian bank has said the overall programme also includes subprogram-2, scheduled for 2026, with another $600 million worth of policy-based loan.
The subprogram-2 envisages further deepening of the reforms initiated under subprogram-1, the lender says.
The budget support 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.
The ADB is one of the largest multilateral development partners of Bangladesh offering some $32497.47 million ($32.5 billion) in loan and $571.2 million in grants till date, ERD officials said.
Development assistance of ADB mainly focuses on power, energy, local government, transport, education, agriculture, health, water resources, governance and financial sectors of Bangladesh.
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