The Asian Development Bank (ADB) will extend approximately US$600 million policy based loan (PBL) support to Bangladesh to help strengthen economic management and governance.
In this regard, a loan agreement was signed between the Bangladesh government and the Manila-based lender at a function at the Economic Relations Division (ERD) on Wednesday, according to a release.
Md Shahriar Kader Siddiky, ERD secretary, and Jiangbo Ning, ADB’s deputy country director, signed the loan agreement for the ‘Strengthening Economic Management and Governance Programme (Subprogram-1) on behalf of their respective sides.
The programme, developed by the Finance Division, aims to promote structural reforms supporting domestic resources mobilization, efficiency of public investment projects, developing private sector, reforming state-owned enterprises, and boosting transparency and good governance.
The programme will be implemented by Finance Division and Financial Institutions Division of the Ministry of Finance, Bangladesh Investment Development Authority and Public-Private Partnership Authority of the Chief Adviser’s Office, Bangladesh Competition Commission and Registrar of Joint Stock Companies and Firms of the Ministry of Commerce, Porgramming Division of the Planning Commission, the National Board of Revenue and the Bangladesh Bank.
According to the loan agreement, the objectives of this programme are- 1. Fiscal management strengthening. 2. State Owned Enterprise governance and investment climate improvement, and 3. Trade policy and logistics strengthening.
“The $600 million assistance under the Strengthening Economic Management and Governance Program (Subprogram 1) supports the government in addressing structural weaknesses in mobilising domestic resources, enabling investment climate, facilitating trade and logistics, and promoting transparency and good governance,” said Jiangbo Ning.
“The reforms under the programme aim to increase income tax revenue by 25%, and value-added tax (VAT) by 30%, while reducing development project cost overruns by 30%, and cutting average time overruns for completed projects to 18 months, by March 2027,” he added.
The 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.
The overall programme also includes subprogram 2, scheduled for 2026, with another $600 million. The subprogram 1 supports the government in initiating tax expenditure rationalization, tax administration automation and digitalization, data transparency, public investment management (PIM) system improvement, SOE governance and fiscal risk monitoring strengthening, regulatory environment streamlining, and trade facilitation.
The subprogram 2 envisages to further deepen the reforms initiated under subprogram 1. In addition, the PBL aims to facilitate policy and institutional reforms to promote a “whole of government” logistics sector reform to reduce the cost of trade and promote export diversification.
ADB’s total aid to Bangladesh till now is above US$ 32497.47 million (Loan) and US$ 571.2 million (Grant).
Development assistance of ADB mainly focuses on power, energy, local government, transport, education, agriculture, health, water resources, governance and financial sectors of Bangladesh.
