Govt seeks fast-track ADB budget support of $500 million

The government is seeking to fast-track the release of US$500 million in budgetary support from the Asian Development Bank (ADB) to help finance a widening fiscal deficit in the current financial year (FY 2025-26), officials said on Saturday.

The funds are being pursued under an ongoing policy-based reform programme and are expected to provide short-term fiscal relief while supporting longer-term structural changes.

Officials at the Economic Relations Division (ERD) said the government is pressing the Manila-based lender to complete its evaluation process swiftly, allowing the funds to be disbursed to the national exchequer within the shortest possible timeframe.

According to ERD officials, the request is aimed at finalising the second tranche of the Strengthening Economic Management and Governance Programme (Subprogramme 2), a policy-based lending facility tied to a series of economic and institutional reforms.

Earlier, in December 2024, the Manila-based lender approved the first tranche of $600 million for Bangladesh under Subprogramme 1 of the same programme.

That financing formed part of a broader $1.1 billion budget support package, which also included US$500 million from the World Bank.

A senior ERD official said the government has formally requested the ADB to expedite its assessment process so that the funds can be injected into the treasury as early as possible.

"The urgency reflects the mounting fiscal pressure we are facing this year," the official noted.

The proposed $500 million financing is a policy-based loan, meaning its disbursement is conditional on the implementation of specific reform measures. ERD officials said Subprogramme 2 is built around four key pillars.

These include strengthening domestic resource mobilisation through accelerated digitalisation of tax administration to improve the tax-to-GDP ratio; enhancing transparency in public expenditure and the governance of state-owned enterprises; streamlining customs procedures to improve export competitiveness as Bangladesh approaches graduation from least developed country (LDC) status; and reinforcing institutional frameworks to curb corruption and improve the overall ease of doing business.

The push for early disbursement comes as Bangladesh faces a projected budget deficit of around Tk 2.26 trillion in the FY26.

Although the government has ramped up domestic borrowing to meet financing needs, officials said external support from multilateral lenders such as the ADB and the World Bank remains critical to safeguarding macroeconomic stability and easing pressure on foreign exchange reserves.

The request also follows a record year of engagement with the ADB. In 2025, the development partner committed more than US$2.57 billion in sovereign financing to Bangladesh, nearly double its commitment in the previous year.

ERD officials said a series of negotiation meetings with the ADB are expected in the coming days.

The government remains confident that visible progress on agreed "prior conditions", including ongoing reforms to the revenue system, will help unlock the funds before the end of the current fiscal quarter.

"This support is not merely about plugging a budgetary gap," the senior ERD official said. "It is a catalyst for the structural reforms needed to keep the economy resilient as Bangladesh transitions into the post-LDC era."