ADB to give Bangladesh $250 million loan to help reform capital market

The Asian Development Bank (ADB) will give Bangladesh a $250-million loan to help reform the capital market.

The government will have to fulfil 26 conditions the lender has set to get the aid.

An agreement to this end was signed between the ADB and Bangladesh’s Economic Relations Division (ERD) on Sunday.

ERD Joint Secretary Saifuddin Ahmed and ADB Country Director Kazuhiko Higuchi signed the deal.

Ahmed later told reporters the government would be able to spend the money to implement budget plans on a priority basis.

ADB will release the loan in two tranches of $80 million and $170 million.

"The government has already fulfilled 10 conditions to get the first instalment," Ahmed said.

He said the second instalment would come once the remaining 16 other conditions were met by December 2017.

ADB had earlier given a $300-million loan to develop the capital market. That, too, was disbursed in two phases after the government fulfilled 28 conditions.

ADB Country Director Higuchi said his organisation would continue helping Bangladesh to become a middle-income country by achieving 8 percent GDP growth by 2020.

He forecast that Bangladesh, growing at over 6 percent annually for past few years, would post a 6.7 percent growth in the current 2015-16 fiscal year.

The ADB conditions include increasing workforce, strengthening the Securities and Exchange Commission, automation, and the updating of Bangladesh Bank laws.

Of the total amount, $100 million will be in the form of a soft loan carrying a 2 percent interest and a repayment time of 25 years, with a grace period of five years.

The remaining $150 million will come as an Ordinary Capital Resource (OCR) loan. It will have to be repaid in 15 years with a grace of three years and 0.15 percent interest added to the London bank rate - LIBOR.