ADB commits over $1.3bn to transform Bangladesh's development landscape

The Asian Development Bank (ADB) and the Government of Bangladesh yesterday (19 June) signed four major loan agreements totalling over $1.3 billion, including $900 million in budget support, to advance key reforms and infrastructure development in the country. 

The agreements were signed at the Economic Relations Division (ERD) in Dhaka by ERD Secretary Md Shahriar Kader Siddiky and ADB Country Director for Bangladesh Hoe Yun Jeong.

The ceremonies, held at the Economic Relations Division in Dhaka, represent a strategic investment across critical sectors that will reshape Bangladesh's economic and environmental resilience for decades to come, read press releases from ADB.

Banking sector transformation takes centre stage

The largest component of yesterday's commitment involves a $500 million program aimed at stabilising and reforming Bangladesh's banking sector. 

"As Bangladesh embarks on implementing broad-based reforms in the banking sector, the program will boost the capacity of the Bangladesh Bank and enhance governance of banks, strengthen the asset quality, and ensure that the financial sector is well-positioned for higher growth," explained Country Director Jeong. 

The program focuses on strengthening regulatory supervision, improving corporate governance, and introducing immediate measures to resolve the significant burden of nonperforming loans that have plagued the banking system.

The reforms will support phased compliance with international banking norms while building the regulator's capacity to ensure adherence to global standards. 

The program will bring significant value addition through building the regulator's capacity for ensuring compliance with international norms, augmenting the capitalisation of the banking sector and improving access to affordable finance for micro, small and medium enterprises.

Climate resilience and inclusive development

ADB committed $400 million to the second phase of the Climate-Resilient Inclusive Development Program (CRIDP). 

This initiative is supported by additional cofinancing of nearly $113 million from the Agence Francaise de Developpement and $400 million from the Asian Infrastructure Investment Bank.

"The program addresses key constraints such as the lack of a holistic and effective institutional framework, as well as inadequate climate financing and private sector participation. It focuses on creating a supportive environment for climate actions, strengthening adaptation, and accelerating mitigation actions," said Country Director Hoe Yun Jeong.

Under CRIDP, the Bangladesh Climate Development Partnership will be established to secure climate finance and help government ministries to develop, implement, monitor and evaluate climate projects more effectively.

Infrastructure modernisation across multiple fronts

The infrastructure component of yesterday's commitment includes $204 million for upgrading the critical Dhaka-Northwest international trade corridor. 

This fourth tranche of a larger $1.2 billion multitranche financing will support the four-laning of a 190-kilometre section from Elenga through Hatikumrul to Rangpur, significantly improving subregional connectivity with Bhutan, Nepal, and India.

"This project supports Bangladesh's commitment to modernise the road transport system and improve subregional connectivity and trade," said Country Director Hoe Yun Jeong. 

"The project will help accelerate economic development of the area along the corridor, and facilitate subregional trade with Bhutan, Nepal, and India." 

"It will also help reduce vehicle operating cost, travel time, vehicle emissions, accidents, and congestion along the Dhaka-Northwest road corridor," Jeong added.

According to an ADB release, the project will contribute to achieving Bangladesh's goal of an efficient and modern transport system by four-laning the 190-km section from Elenga through Hatikumrul to Rangpur. 

It will improve road safety and adopt gender-responsive features by including footbridges, footpaths, and two dedicated lanes for slow-moving traffic to make women's travel safer, as studies show that women particularly use the route on foot or slow-moving vehicles such as rickshaws. 

Road operation and management in the Roads and Highway Department will also be strengthened. Climate-resilient design features are being adopted for constructing the road. 

$200 million to improve power transmission, promote renewable energy

The Asian Development Bank (ADB) and the Government of Bangladesh signed a $200 million loan agreement to enhance the quality, reliability, resilience, and efficiency of the power supply system and promote renewable energy in Bangladesh. 

The Power Transmission Strengthening and Integration of Renewable Energy Project will improve the power transmission grid in rural areas of the districts of Bogura, Chandpur, Gopalganj, Habiganj, Perojpur, and Satkhira in the Bangladesh Economic Corridor (BEC) region. The project will also facilitate the integration of renewable energy generation in the variable renewable energy (VRE) hub in the southern Chattogram division.

"Reliable access to electricity is essential for sustaining economic growth, reducing poverty, supporting business expansion, and generating employment opportunities — especially for poor and socially disadvantaged communities," said Country Director Hoe Yun Jeong. 

"This project will directly contribute to generating jobs for residents of local communities, integrate renewable energy, improve the capacity of energy sector entities, and introduce new technologies."

The successful implementation of the government's economic reforms, advancement of sound macroeconomic policies, and promotion of social progress all depend on a clean, reliable, uninterrupted, and inclusive power supply. 

Bangladesh's heavy reliance on natural gas and its rapidly rising energy imports highlight the significant challenges in meeting the country's fast-growing energy demand, while ensuring long-term energy security and sustainability. 

Given Bangladesh's high vulnerability to climate-related hazards, it is essential to invest in disaster-resilient power transmission infrastructure to safeguard development gains and ensure uninterrupted energy access.