ADB approves $600 million budget support to Bangladesh

The Asian Development Bank (ADB) will provide a $600 million policy-based loan (PBL) to Bangladesh, with a package of structural reforms supporting mobilisation of domestic resources, efficiency of public investment projects, developing the private sector, reforming state-owned enterprises, and promoting transparency and good governance. 

"ADB's PBL promptly responds to Bangladesh's immediate development financing needs following the political transition. The reforms target improvements in economic management and governance as well as economic diversification and competitiveness," said ADB Regional Lead Economist Aminur Rahman.

"ADB's programme was developed in close collaboration with the International Monetary Fund, World Bank, and other development partners," he added.

Bangladesh has been struggling with revenue mobilisation, as it possesses the lowest tax-to-gross domestic product ratio in the world, at only 7.4%, says an ADB press release issued today (11 December).

The loan will help Bangladesh introduce key policy actions with the aim of increasing domestic resource mobilisation, while improving transparency and accountability. 

The programme includes digitalisation and green initiatives, rationalisation of tax incentives and exemptions, and measures to assist taxpayers to boost tax morale, adds the release.

Another key objective of the loan is to ensure improved transparency and efficiency of public investment projects through increased digitalisation. It also aims to promote private sector development and foreign direct investment by streamlining regulatory environment and creating a level playing field. 

The loan also aims to facilitate policy and institutional reforms to promote the government logistics sector reform to reduce the cost of trade and promote export diversification.