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ADB Action on Loan for Sundarbans Conservation Project in Bangladesh

MANILA, PHILIPPINES (10 September 2003) - Following consultation with the Government of Bangladesh, the Asian Development Bank (ADB) has suspended its loan and two associated technical assistance (TA) grants for a conservation project in the Sundarbans Reserve Forest, it was announced today.

The move comes pending a redesign of the project, through a participatory and consultative process, involving the Government of Bangladesh and all stakeholders, and improvement in financial management.

ADB's Board of Directors approved the US$37 million loan for the Sundarbans Biodiversity Conservation Project in November 1998. The loan became effective in August 1999 and the original closing date is 31 December 2006.

The total cost of the project was $77.7 million, involving funds also from the Global Environment Facility and Government of the Netherlands. The executing agency is the Forest Department of the Ministry of Environment and Forest.

However, the project encountered difficulties with the design and implementation, including lack of adequate financial management.

With more than half of the loan period elapsed, less than one quarter of the project has been implemented as of end-June 2003 and only 23% of the funds has been disbursed.

The project aims to develop a sustainable management and biodiversity conservation system for the forest, part of the world's largest remaining contiguous mangrove area, and reduce poverty of 3.5 million people living around the Sundarbans.

It also envisages instituting a participatory system to conserve and manage the forest and its biodiversity as a multidimensional resource, introducing modern management systems that involve all stakeholders in the 17 subdistricts around the forest.

While no further withdrawal can be made until and unless ADB decides to lift the suspension, the decision does not affect disbursements committed through outstanding letters of credit.

In addition, to meet requests for payment received by ADB before effectiveness of the suspension date, ADB may make disbursements to pay for civil works, shipment of goods, and consulting services rendered beforehand.

More at adb.org/media

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