ADB Sanctions $400 Million Loan To Bangladesh To Aid Economic Recovery

The Asian Development Bank (ADB) has approved a $400 million loan to Bangladesh to advance domestic resource mobilisation reforms and improve the efficiency of governmental spending. This financial assistance will also promote inclusive access to innovative and low-cost bank financing for small firms, with a special emphasis on women-led businesses.

This loan is the second subprogramme of ADB's Sustainable Economic Recovery Programme, which was launched in October 2021 to aid the country's post-pandemic economic recovery, according to a news statement from ADB.

The enhancement of income tax collection through the adoption of a new Income Tax Act, aiming at reducing tax loopholes, enhancing compliance and enforcement measures, and extending the country's tax base, is a crucial component of the project. Additionally, efforts will be made to improve openness and efficiency in public procurement through strengthening electronic procurement and payment systems. The newly launched computerised system for the appraisal and approval of public projects would expedite project approval procedures.

The loan package also supports Bangladesh Bank's innovative financing offerings, which provide low-cost microcredit through commercial banks via digital channels and e-wallets. This project will make bank credit available to marginalised and landless farmers, small traders, and low-income individuals. Furthermore, micro and small firms, as well as women entrepreneurs who do not have real estate collateral, will be able to access financing based on trade receipts and other non-fixed collateral, such as modest equipment and machinery.

This comprehensive project prioritises gender equality, social inclusion, and addressing the climate change agenda in public investment and national budgeting.