Beyond the budget support, the World Bank has approved $379 million for the health and nutrition sector and $280 million for the development of the water supply system in Chattogram.
In a significant boost to Bangladesh’s economic reform and development agenda, the Asian Development Bank (ADB) and the World Bank (WB) have collectively approved $1.1 billion in budget support. This funding is aimed at accelerating ongoing reforms and addressing development challenges faced by the interim government.
Of the total budget support, the ADB approved $600 million under the ‘Strengthening Economic Management and Governance Programme, Subprogramme 1.’ A loan agreement for this amount was signed on December 18, 2024, between the Bangladesh government and the ADB. Initiated by the Finance Division, this program is designed to enhance economic management and governance.
The World Bank contributed $500 million under the ‘Second Bangladesh Green and Climate Resilient Development Credit’ program. The financing agreement was finalized on December 19, 2024, between the Bangladesh government and the International Development Association (IDA), the concessional lending arm of the World Bank. The program aims to implement reforms promoting green and climate-resilient development, as well as strengthening fiscal and financial policies to sustain economic growth and resilience to future shocks, including those caused by climate change.
Breakdown of Loan Agreements
ADB Loan: The $600 million ADB loan, part of the ‘Strengthening Economic Management and Governance Programme,’ will support initiatives to improve fiscal discipline, governance, and economic efficiency. The funding will be available by December 2024, as reported by the Ministry of Finance. This initiative is part of the government’s broader strategy to foster sustainable economic growth.
World Bank Loan: The $500 million World Bank funding comprises two components. Half of the amount, $250 million, is an IDA-Regular loan repayable over 30 years with a 5-year grace period. This component carries an interest rate of 1.25 percent, a commitment fee of 0.50 percent, and a service charge of 0.25 percent. The remaining $250 million comes from the IDA-Shorter Maturity Loan (SUW-SML) program, repayable over 12 years with a 6-year grace period. This loan is free of interest, service, or other charges, with a commitment fee of 0.50 percent that is usually waived by the World Bank.
Md Shahriar Kader Siddiky, Secretary of the Economic Relations Division, and Abdoulaye Seck, Country Director of the World Bank, signed the agreement on behalf of their respective organizations. The program involves multiple implementing agencies, including the Local Government Division, Bangladesh Bank, and ministries responsible for planning, climate change, energy, and health.
Additional Support
Beyond the budget support, the World Bank has approved $379 million for the health and nutrition sector and $280 million for the development of the water supply system in Chattogram. These investments highlight the World Bank’s commitment to strengthening essential infrastructure and public services in Bangladesh.
Development Partner Contributions
The World Bank has been a critical development partner for Bangladesh since the country’s independence, committing over $43 billion. Currently, the World Bank finances 52 ongoing projects worth $17 billion, covering diverse sectors such as infrastructure, health, education, power, and the environment. This extensive collaboration underscores the institution’s role in supporting Bangladesh’s development aspirations.
Strategic Importance
The budget support from the ADB and World Bank arrives at a crucial time as Bangladesh navigates economic challenges and aims to bolster its resilience against future uncertainties.
The funding will enable the government to advance key reform initiatives, enhance climate resilience, and sustain robust economic growth. This $1.1 billion in budget support, coupled with additional sectoral funding, represents a major step forward in achieving Bangladesh’s long-term development goals. It reinforces the commitment of international development partners to support the nation’s journey towards sustainable and inclusive growth.
