Govt plans $3.9b in foreign aid for 17 key infrastructure, tech schemes

The government has shortlisted 17 new projects for implementation with foreign financing, with the proposed schemes carrying a combined estimated cost of Tk48,199.60 crore or around $3.9 billion at the current exchange rate.

Prepared under preliminary development project proposals (PDPPs), the projects will be placed at the Foreign Aid Search Committee for a final decision on seeking external loans or grants. The committee is scheduled to meet on 23 July.

According to ERD documents, the projects prioritise key sectors including science and technology, urban infrastructure and slum development, climate and flood control, rail connectivity, artificial intelligence, technical skills development, and waste management.

The proposed projects are expected to be implemented between 2026 and 2032. They aim to strengthen infrastructure, improve resilience to climate risks, generate local employment, and enhance export competitiveness to support sustainable socio-economic development.

Infograpics: TBS

The government plans to approach the World Bank, ADB, AIIB, IsDB, Jica, Koica, UNDP, Saudi Fund for Development (SDF) and other agencies.

Several projects have already drawn interest from potential financiers, while others will be placed before the Foreign Aid Search Committee to identify suitable funding sources.

Economists urge caution over big-ticket spending

While several projects have already drawn interest from potential financiers, economists advocate a more prudent approach to new commitments.

Sayema Haque Bidisha, professor of economics at Dhaka University, warned that the government should exercise greater caution before taking on large new mega-projects.

"Rather than launching new mega-projects, priority should be given to completing ongoing and unfinished schemes," Bidisha said. "Accelerating the implementation of existing projects would help improve development outcomes while easing immediate financing pressures."

She urged the government to prioritise projects carrying a higher grant element and to focus investments on human capital – including health, education, skills, technology, AI, and institutional capacity. She added that smaller, targeted projects deserve greater attention alongside major infrastructure schemes, as they typically come with more favourable lending terms.

How foreign financed projects selected

ERD officials said projects seeking foreign financing must first receive policy approval from the Planning Commission, which then forwards the list to the ERD for assessment of their suitability for external funding. The Foreign Aid Search Committee subsequently identifies the most appropriate development partner based on each project's requirements.

In many cases, the process also works in reverse, with projects tailored to meet the priorities and conditions of specific lenders. Some schemes are designed with particular development partners in mind to improve their chances of securing financing.

Bangladesh secured $4.794 billion in financing commitments from development partners in FY26, including $1.564 billion in budget support, according to ERD.

The government aims to secure more than $6 billion in fresh commitments from development partners in FY27. The budget has allocated Tk43,000 crore in external support.

Rail project revived with new lenders after Indian exit

One of the projects proposes revival of a key rail project to build a new dual-gauge railway line from Bogra to Shahid M Mansur Ali Station in Sirajganj, according to ERD sources.

The government has sought alternative funding for the project. The AIIB has expressed interest in financing it, while the ERD expects the ADB could also provide a loan.

Officials said loan proposals may also be sent to the IsDB. The plan is to implement the project with financing from whichever partner offers the most concessional terms.

Under a revised proposal, the project's estimated cost has almost doubled to about $843 million, up from around $453 million when it was approved in 2018.

The project was originally scheduled to be implemented under India's Line of Credit (LoC). However, prolonged delays in the approval process stalled progress for years. 

Following the change of government last year, the authorities decided not to proceed with several projects under Indian credit, prompting the search for alternative financing.

Slum improvement at Karail, Sattola, Bhasantek

The Dhaka North City Corporation has proposed the "Slum Improvement at Karail, Sattola and Bhasantek Area" project, at a cost of $960 million.

The project will provide safe water supply, modern sewerage and solid waste management services, while upgrading internal roads, public health, and the urban environment.

Dhaka North has also proposed the "Kallyanpur Canal Project", estimated to cost $145 million, for implementation between 2026 and 2031. 

The project aims to ease waterlogging, modernise the drainage system and improve solid waste management. It also includes canal restoration, climate-resilient infrastructure and institutional capacity building to support Dhaka's long-term environmental sustainability.

The Local Government Division has also proposed a $250 million project aimed at strengthening urban resilience and developing green, sustainable infrastructure nationwide.

Scheduled for implementation from January 2026 to December 2030, the programme is expected to benefit around 1.5 crore urban poor through climate-resilient and pro-poor urban development. The government is seeking funds from the UNDP, the WB or the ADB.

Remittance, labour welfare

The Bureau of Manpower, Employment and Training has proposed establishing a language laboratory and automobile workshop at Dhaka Technical Teachers Training Institute.

The Tk31.25 crore initiative will enhance English language proficiency among teachers and students while providing modern hands-on training in automotive mechanics. The project is scheduled to run from January 2026 to December 2030.

Meanwhile, the Wage Earners' Welfare Board has proposed the "Leveraging Remittances in Bangladesh" project, estimated to cost Tk1,013.05 crore.

The project aims to make remittance transfers easier and cheaper, improve financial literacy and encourage migrant workers to channel their earnings into productive investments.

Research and tech projects

The Bangladesh Hi-Tech Park Authority has proposed a technical assistance project to strengthen the country's artificial intelligence (AI) sector.

Scheduled for implementation from July 2026 to December 2029, the project is estimated to cost about $15.7 million, with Koica providing a $12.9 million grant and the government contributing around $2.7 million.

Officials at the ICT Division and the ERD said South Korea has given initial approval for the funding. Following review by the Foreign Aid Search Committee, the proposal will be sent through the ERD to Korea for final approval.

The Bangladesh Council of Scientific and Industrial Research (BCSIR) has proposed four grant-funded projects. These include developing a biorefinery system using waste biomass to produce fertiliser; converting fish waste into high-value bioactive compounds for export; strengthening SMEs' export competitiveness and ESG compliance; and assessing flood, cyclone and heatwave risks to support climate-resilient infrastructure planning.

The four projects are scheduled for implementation between July 2026 and September 2027, with estimated costs ranging from Tk5.39 crore to Tk7.85 crore.

Bridge projects

The Roads and Highways Department (RHD) is seeking foreign financing for the construction of the Mongla Bridge over the Mongla River in Bagerhat.

The bridges are estimated to cost $139.95 million. According to RHD officials, it is planned as a permanent alternative to the existing ferry crossing, improving connectivity and ensuring uninterrupted transport across the river.

The Local Government Engineering Department (LGED) has proposed the "Construction of Five Important Bridges on Rural Roads Project" to improve rural road connectivity. 

The project aims to strengthen transport links at the upazila, union and village levels, creating jobs, reducing poverty and improving living standards in rural communities.

The project is to cost $274.94 million. The Saudi Fund for Development (SFD) has given initial approval to finance it. Implementation is planned from January 2026 to June 2032.