The Asian Development Bank (ADB) on Wednesday approved a $600 million budget support package for Bangladesh to assist the country in managing its economy amid declining domestic revenues and a shrinking foreign exchange reserve.
The policy-based loan (PBL) comes with a package of structural reforms supporting mobilisation of domestic resources, efficiency of public investment projects, developing private sector, reforming state-owned enterprises, and promoting transparency and good governance.
The country has the lowest tax-to-GDP ratio in the world, at only 7.4 percent. The PBL is expected to help Bangladesh introduce key policy actions with the aim of increasing domestic resource mobilisation, while improving transparency and accountability.
The programme includes digitalisation and green initiatives, rationalisation of tax incentives and exemptions, and measures to assist taxpayers to boost tax morale, says an ADB statement.
“ADB’s PBL 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.
“ADB’s programme was developed in close collaboration with the International Monetary Fund, World Bank, and other development partners,” he added.
Improved transparency and efficiency of public investment projects through increased digitalisation is another key objective of the budget support.
The PBL promotes private sector development and foreign direct investment by streamlining regulatory environment and creating a level playing field.
To simplify 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.
The PBL also 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.
