ADB's Work in Bangladesh

Exports, remittances, and domestic consumption buoyed Bangladesh’s economy in fiscal year 2021 with gross domestic product rising to 6.9%, from 3.4% in the previous year. Growth in both years was markedly lower than in the fiscal year 2019 and the average growth from 2016–2019 due to the impact of the coronavirus disease (COVID-19) pandemic.

The Asian Development Bank (ADB) is a key source of external assistance for Bangladesh, providing $2 billion on average annually during 2016–2021. ADB’s assistance is aligned with Bangladesh’s Eighth Five-Year Plan, 2021–2025 and the Perspective Plan, 2021-2041.

To date, ADB has committed 679 public sector loans, grants, and technical assistance totaling $26.7 billion to Bangladesh. Cumulative loan and grant disbursements to Bangladesh amount to $19.69 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Bangladesh includes 64 loans and 1 grant worth $10.5 billion.

The first tranche ($400 million) of a corridor road project will help construct the 210-kilometer Dhaka–Sylhet highway. An additional $13.5 million loan will scale up an ongoing project to modernize irrigation and improve the management, operation, and maintenance of large irrigation schemes.

In 2021, ADB provided $9.6 million in grants and technical assistance to Bangladesh for reforming social protection and public financial management systems, capacity building for CMSEs, managing water resources and road safety and maintenance, and strategic transport planning.

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Bangladesh as of 31 December 2021 was $793.05 million representing 5.64% of ADB’s total private sector portfolio.

Operational challenges. Despite significant socioeconomic development over the past decade, Bangladesh still faces infrastructure and skills deficits. Insufficient capacity of the few executing and implementing agencies, and lengthy internal business processes often delay the project approvals and implementation

Pump operator checks the outlets of the water irrigation in Bangladesh. Photo: Abir Abdullah/ADB

COVID-19 Response

ADB committed around $2.8 billion in loans, technical assistance, and trade finance and microfinance programs in 2021, including $2.4 billion for tackling COVID-19. This included a $940 million loan to support the national vaccination program. A $250 million loan was extended to improve the social protection system, and another $250 million loan was committed to help reform the public financial management, and mobilize revenue system.

A $150 million loan will help provide financing for cottage, micro, and small-sized enterprises (CMSEs) to create jobs for promoting socioeconomic recovery after the pandemic.

Knowledge Work

An important contribution of ADB’s knowledge work in 2021 for Bangladesh was a paper on monetary policy transmission mechanism, with its key finding that government loans via national savings certificates could weaken the effectiveness of the monetary policy transmission mechanism.

Other 2021 knowledge products looked at innovations for CMSEs, their cluster needs and incubation facilities, and a needs assessment for public financial institutions. These knowledge works supported policy dialogue on ways to accelerate Bangladesh’s socioeconomic recovery from COVID-19. The detailed preparatory work done for the country partnership strategy and the country assistance program evaluation 2021 provided a greater understanding of the critical impediments to development and the policies needed to overcome these challenges.

  ADB Projects in Bangladesh Project data sheets for loans, grants, TAs

Future Directions

The ADB country partnership strategy (CPS) 2021–2025 for Bangladesh supports the country in achieving its vision of promoting prosperity and fostering inclusiveness through three strategic objectives—boosting competitiveness, employment, and private sector development; promoting green growth and climate resilience; and strengthening human capital and social protection. In delivering these priorities, ADB will accelerate gender equality and social inclusion, strengthen institutional capacity and governance, deepen regional cooperation and integration, and promote new technology and innovation. The CPS adopts knowledge-driven multidisciplinary approaches with enhanced focus on climate change management. Over 2022–2024, ADB has a pipeline of 40 firm projects worth $7.9 billion and 40 standby projects worth $8.5 billion for Bangladesh. The technical assistance program includes 45 projects totaling about $40 million.

In 2022, ADB will support sustainable and resilient recovery from the COVID-19 pandemic with sharpened focus on health and social protection, food security, skills development, rural development, water and sanitation, and the finance sector, among others. Technical assistance will emphasize innovation and promote new technologies.