Bangladesh signs $400m budget support loan agreement with AIIB for climate-resilient development

The government of Bangladesh has signed a $400 million financing agreement with the Asian Infrastructure Investment Bank (AIIB) to strengthen climate resilience and inclusive development. 

The funding will support the implementation of the 'Climate Resilient Inclusive Development Program – Subprogram 2' under the Ministry of Finance. 

The agreement was signed today (23 June) at the AIIB headquarters in Beijing. 

Mirana Mahrukh, additional secretary of ERD, represented the Government of Bangladesh, while Rajat Misra, acting chief investment officer of Public Sector (Region 1) and Financial Institutions and Funds (Global) Clients, and director general of Public Sector Clients Department Region 1, signed on behalf of the AIIB.

The $400 million loan will be utilised as budget support to implement key policy reforms aimed at combating climate change and fostering sustainable development. 

The programme, led by the Finance Division, focuses on three major areas.

These include creating an enabling environment for implementing climate priorities across government ministries, facilitating climate adaptation initiatives, and accelerating climate change mitigation measures.

This strategic initiative reflects the government's continued commitment to integrating climate considerations into national planning and development. It is expected to make a significant contribution to Bangladesh's long-term sustainability and socio-economic resilience.

The loan has a maturity period of 35 years, including a five-year grace period. It carries an interest rate based on the Secured Overnight Financing Rate (SOFR) plus a variable spread, with a front-end fee of 0.25%, aligned with AIIB's standard terms and conditions.

Officials from both parties expressed confidence that the programme will pave the way for more inclusive and climate-conscious policy reforms across various sectors.