ADB to extend $1.5b in loan to Bangladesh

The credit will be available in three phases, starting with $500m

FE Team | Published: September 16, 2024 00:04:55

The World Bank and the Asian Development Bank, or ADB, are set to provide Bangladesh with $2.5 billion in loans aimed at bankrolling efforts to reform the banking and financial sectors, reports bdnews24.com.
The World Bank will contribute $1 billion of the total, with the ADB providing $1.5 billion.
The loans were discussed during separate meetings between Bangladesh Bank and the two lending agencies on Sunday, according to the central bank's spokesperson Husne Ara Shikha.
She said, "The World Bank has committed $1 billion in loan assistance to support reforms in Bangladesh's banking and financial sectors on three conditions.
"Of this, $750 million will be disbursed as policy support by December, while $250 million will come as an investment loan and guarantee facility, though this will take more time. Moreover, ADB will provide $1.5 billion in three phases, starting with $500 million."
The loans would be provided after approval from the boards of the Washington-based World Bank and ADB headquartered in Manila, with Bangladesh receiving the funds under policy-based loans, or PBL.
She said Bangladesh would need to meet several conditions to receive the loans, including forming an asset management company in the private sector, redefining non-performing loans according to international standards, and completing audit reports from a newly established task force. However, half of the necessary reforms are already underway.
On Sunday afternoon, Governor Ahsan H Mansur held a separate meeting with Brent Neiman, deputy under-secretary for international finance at the US Department of the Treasury.
The discussions focused on improving the macro economy, covering topics such as inflation, recovering laundered funds, and boosting growth.
The US promised cooperation in reforming the financial sector.
Since the fall of the Awami League government on Aug 5, the interim administration has initiated reforms across all sectors of the economy, starting with the banking sector.