ADB Approves $600 Million Loan to Bangladesh for Structural Reforms

Loan to bolster domestic resource mobilization, enhance public investment efficiency, and promote governance reforms

Manila [Philippines], January 12: The Asian Development Bank (ADB) has approved a $600 million policy-based loan for Bangladesh to support the country in implementing structural reforms. These reforms aim to improve domestic resource mobilization, enhance public investment efficiency, promote private sector development, reform state-owned enterprises, and strengthen transparency and governance.

Key Objectives of the Loan:

1. Boost Revenue Mobilization: Help Bangladesh address its low tax-to-GDP ratio, one of the lowest globally.
2. Enhance Public Investment Efficiency: Support the effective use of resources for infrastructure and development projects.
3. Private Sector Development: Encourage a conducive environment for private sector growth.
4. State-Owned Enterprise Reforms: Advance the restructuring of state enterprises for better productivity and accountability.
5. Logistics Sector Reform: Reduce trade costs and encourage export diversification through a "whole of government" approach.

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"ADB's policy-based loan promptly responds to Bangladesh's immediate development financing needs following the political transition," said Aminur Rahman, ADB Regional Lead Economist. He emphasized that the program was developed in close collaboration with the International Monetary Fund (IMF), World Bank, and other development partners.

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Challenges Addressed

Bangladesh faces significant revenue mobilization challenges, compounded by its low tax-to-GDP ratio. The ADB loan aims to introduce key policy actions to address these issues while promoting economic diversification and reducing trade costs.

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Impact on Trade and Exports

One major focus of the loan is logistics sector reform, designed to streamline processes, reduce trade costs, and support the country’s ambitions for export diversification.