ADB's New Strategy for Bangladesh Earmarks $1.8 Billion in Loans over 3 Years

MANILA, PHILIPPINES (31 October 2005) - In a landmark harmonization initiative, ADB released today a Country Strategy and Program (CSP) for 2006-2010 devised with its development partners to support the Bangladesh Government in its aim of halving poverty and improving human development.

Over its first three years, the CSP proposes loans totaling about $1.8 billion for 15 projects, half of which will be from ADB's concessional lending instrument, the Asian Development Fund. This will be supported by a technical assistance grant program amounting to about $13.8 million. The grant assistance will be augmented by initiatives financed by other ADB-managed funds.

The new results-based CSP is part of a joint strategy worked out with the UK's Department for International Development, Government of Japan, and World Bank, which together provide about 80% of development assistance to Bangladesh.

The four partners' strategy is aligned with the vision and priorities of Bangladesh's national poverty reduction strategy (NPRS), titled Unlocking the Potential: National Strategy for Accelerated Poverty Reduction, which aims to achieve the Millennium Development Goals, including halving the number of poor people in the country by 2015 and delivering substantial improvement in almost all aspects of human development. To achieve these aims, the NPRS prioritizes combating corruption, ensuring the rule of law, and improving governance.

"The new joint approach allows ADB to be more selective and focused, building on its experience and sector strength," says Hua Du, ADB Country Director in Bangladesh. "ADB will now strengthen its engagement in sectors where reforms are difficult but are of fundamental importance to the growth of the national economy."

ADB will therefore play a major role in supporting policy and institutional reforms to increase efficiency in the energy, transport, urban health, and urban water supply and sanitation sectors. It will also support its development partners in other areas, such as agriculture, water resources management and financial sector development.

Building country capacity and ensuring community participation (especially by women and disadvantaged groups) in designing and carrying out projects will remain a key feature of operations during the five year life of the CSP. Disaster mitigation, regional cooperation, and environment will, meanwhile, be addressed across all the sectors.

Further, ADB's private sector operations will be aligned to complement public sector operations to address critical infrastructure and policy constraints to mobilizing private investment.

Despite steady growth and some economic and social development gains, almost half of Bangladesh's population remains poor, while per capita gross domestic product was only $418 in fiscal year 2004. Efforts to overcome poverty face numerous constraints, including a poor overall governance situation, according to the CSP.

ADB will increase its assistance to improve local governance by helping to boost local governments' planning and delivery of services through partnerships with the private sector and civil society. These will be complemented by support to address critical constraints to good governance, including measures to combat corruption, improve access to justice, and build management skills.

"A process of joint monitoring and managing for results, together with the Government, will help maintain the momentum and spirit of harmonization and alignment to support poverty reduction in Bangladesh," the CSP says.

Bangladesh became a member of ADB in 1973. Up to the end of 2004, ADB had approved 158 public sector loans totaling $7.4 billion and 297 technical assistance activities amounting to $158 million.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is usually prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program.

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