Bangladesh and ADB

ADB's Work in Bangladesh

Over the past 25 years, Bangladesh has more than halved its incidence of poverty. The country’s economy grew by an average of 6.9% from fiscal year (FY) 2011 to FY2019 and, despite the coronavirus disease (COVID-19) pandemic, expanded by an estimated 5.2% in FY2020. The country gained lower middle-income status in 2015 and met the United Nations eligibility criteria to graduate from the least developed country status (LDC) in March 2018 with graduation to be effective in 2026.

The business district at Motijheel in Dhaka, Bangladesh.

The Asian Development Bank (ADB) has been supporting Bangladesh since 1973 and established its first field office in Dhaka in 1982. ADB is preparing a new country partnership strategy for 2021–2025, aligning with the Government of Bangladesh’s Eighth Five Year Plan (FY2021–FY2025).

Since 1973, ADB has committed loans, grants, and technical assistance worth $28.57 billion for Bangladesh. The country is a major recipient of ADB concessional resources. Cumulative loan and grant disbursements to Bangladesh amount to $17.12 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.

A $50 million loan scaled up the Microenterprise Development Project to reinvigorate microenterprises affected by the pandemic, injecting liquidity into Bangladesh’s rural economy and protecting or creating at least 90,000 jobs (70% for women).

ADB is partnering with factories in Bangladesh’s booming garments industry to provide young women with the skills they need to succeed in employment.

Under the $100 million COVID-19 Response Emergency Assistance Project, ADB is supporting government efforts to meet immediate public health requirements. The project covers urgently needed health equipment and medical supplies, equipping 17 medical college hospitals with isolation and critical care units, upgrading 19 laboratories with COVID-19 diagnostic facilities, and providing training to over 3,500 health workers (about 50% women).

ADB committed a $100 million loan for the Rural Connectivity Improvement Project to construct 2,630 kilometers of rural roads, benefiting around 92 million people in 34 districts, while the $160 million Khulna Sewerage System Development Project is establishing a state-of-the-art sustainable sewerage system for over 880,000 residents of this southwestern city.

The distribution grids at Sirajganj Power Plant in northern Bangladesh

ADB has also provided a $200 million loan to boost the ongoing Bangladesh Power System Enhancement and Efficiency Improvement Project, providing more efficient and reliable electricity supply to over 150,000 rural households in southwestern Khulna division.

ADB contributed over $406 million to the South Asia Subregional Economic Cooperation Dhaka - Northwest Corridor Road Project, expanding a 190-kilometer section of a priority international trade and transport corridor connecting Bangladesh with Bhutan, India, and Nepal. ADB also committed $50 million for the Strengthening Bangladesh Infrastructure Finance Fund Limited Project, which is funding and implementing public-private partnerships for infrastructure projects to create over 3,000 jobs and accelerate economic recovery from the COVID-19 pandemic.

A $42 million loan for the Transport Connectivity Improvement Preparatory Facility will help prepare road and rail projects to promote multimodal transport and connectivity in Bangladesh, improving local and global supply chains, reducing transportation time and costs, and increasing competitiveness and efficiency.

ADB helping Bangladesh rejuvenate railways to offer safer, more energy-efficient and reliable travel for country’s 160 million population.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

In 2020, commitments from ADB’s own funds amounted to $123.28 million for two power projects and an emergency working capital support for a dairy value chain project in Bangladesh. Trade and Supply Chain Finance and Microfinance commitments have reached $781.86 million. Cofinancing totaled $1,079.7 million. Total outstanding balances and commitments of ADB’s nonsovereign transactions in the country as of 31 December 2020 was $583.5 million, representing 4% of ADB’s total nonsovereign portfolio.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Bangladesh in 1974. Since then, sovereign cofinancing commitments for Bangladesh have amounted to $10.87 billion for 69 investment projects and $94.10 million for 109 technical assistance projects. Nonsovereign cofinancing for Bangladesh has amounted to $4.37 billion for nine investment projects and $0.22 million for one technical assistance project.

In 2020, Bangladesh received a total of $651.06 million sovereign loan cofinancing from the Asian Infrastructure Investment Bank, the Japan International Cooperation Agency, and the OPEC Fund for International Development for the COVID-19 Active Response and Expenditure Support Program.

A summary of cofinanced projects is available at Bangladesh: Cofinancing.

Operational Challenges

Despite significant socioeconomic development over the past decade, Bangladesh still faces huge infrastructure and skills deficits. Lengthy internal business processes often delay project approvals, while limited capacity of few executing and implementing agencies often leads to delays in project implementation.

In 2020, ADB continued special initiatives and policy dialogues to boost project implementation capacity, improve project readiness, and enhance technical design covering environment, land acquisition, and involuntary resettlement. ADB’s updated procurement policy and regulations, rolled out and operationalized in 2017, are helping ensure faster procurement and consultant recruitment as well as simpler and more effective fiduciary systems throughout the project cycle.

Future Directions

During 2021–2023, ADB has a pipeline of 30 firm projects worth $5.9 billion and 27 standby projects worth $5.2 billion for Bangladesh. The technical assistance program for 2021–2023 includes 39 projects worth about $52 million (including cofinancing). Standby projects are included to build a strong pipeline of bankable initiatives in response to Bangladesh’s needs, growing absorptive capacity, and project readiness.

ADB has adjusted program priorities to help Bangladesh overcome the COVID-19 pandemic and challenges related to health and social protection, food security, skills development, rural development, water and sanitation, and the finance sector, among others. Climate resilience, gender inclusion, and balanced regional development continue to be core priorities. Support for the private sector and public–private partnership projects will be enhanced. To mobilize more resources, cofinancing opportunities will be leveraged and diverse financing tools and modalities (including policy-based loans, technical assistance, grants, equities, guarantees, B loans, and trade financing) will be explored. Technical assistance will be increased to emphasize innovation and promote new technologies