Bangladesh has signed a $450 million financing agreement with the World Bank to strengthen the country’s financial sector safety net, enhance regulatory and supervisory capacity, and support banking sector restructuring.
The agreement under the Financial Sector Support Project II was signed on October 30 between the Government of Bangladesh and the International Development Association (IDA), the World Bank’s concessional lending arm.
Economic Relations Division (ERD) Secretary Md. Shahriar Kader Siddiky and World Bank Division Director for Bangladesh and Bhutan Jean Pesme signed the agreement on behalf of their respective sides.
The project will receive 328 million Special Drawing Rights (SDR), equivalent to $450 million, and will be implemented over five years, from July 1, 2026, to June 30, 2031.
Bangladesh Bank will implement the project under the supervision of the Financial Institutions Division (FID) of the Ministry of Finance.
The project is designed to strengthen the financial sector safety net, enhance the supervisory capacity of relevant financial sector authorities and support the restructuring of the banking sector.
Under the financing terms, the credit carries an annual interest rate of 1.5 percent on the withdrawn balance. A commitment fee of up to 0.50 percent per annum is also applicable to the undisbursed balance.
However, the World Bank has waived the commitment fee for Bangladesh for many years, including the current fiscal year, according to an ERD press release.
The financing has a repayment period of 25 years, including a five-year grace period.
The ERD said the World Bank remains Bangladesh’s largest multilateral development partner, providing financial support across a broad range of areas, including economic and social development, institutional reforms, infrastructure and energy sector development.
The latest agreement underscores the continued partnership between Bangladesh and the World Bank in strengthening the country’s financial sector and institutional capacity.