Bangladesh seeks $800m from ADB in external support for budget

The matter may be submitted for approval at the ADB's board meeting after September, an official says

Bangladesh has requested $800 million in budget support from the Asian Development Bank, or ADB.

Officials say the support has been solicited to strengthen the economic structure as the country transitions from a least developed country to a developing nation. The government hopes the fund will lighten pressure on reserves.

The next ADB mission is expected to arrive in Dhaka on Jul 7. Discussions are anticipated to conclude by then, and the matter may be submitted for approval at the ADB's board meeting after September, Ziaul Abedin, additional secretary of the Macro Economy Wing of the Finance Division, told bdnews24.com.

A 12-strong committee, headed by Abedin, is working to finalise the policy and procedures of the proposals made by ADB for the budget support. The committee met for the first time on Sunday.

Representatives from the Finance Division, the Prime Minister's Office, the Economic Relations Division, Bangladesh Bank, the National Board of Revenue, and the ministries of commerce and industry, among others, attended the meeting.

Abedin told bdnews24.com:"We are currently discussing the necessary reforms in revenue and finance sectors for our transition from LDC status by 2026, and will implement them accordingly."

He added that the projects under the budget support would focus on increasing revenue collection.

Automating the taxation system, increasing the ability to prevent tax evasion, and the rapid translation of customs laws into English are also prioritised to foster development in the private sector, according to Abedin.

According to documents from the Finance Division, $800 million has been requested under two sub-programmes, aiming to increase the tax-to-GDP ratio by 2 percentage points to 9.4 by 2027.

Abedin added, "We hope to conclude all discussions by mid-September and finalise our actions, aligning with the targets under the support of the International Monetary Fund and the World Bank to avoid setbacks in achieving the goals."

"It will be known later whether this amount will come under two or more sub-programmes."

Previously, Bangladesh signed an agreement to receive $250 million in budget support from ADB, which was allocated for bolstering social security.

ADB, says it has been providing Bangladesh with an average of $2 billion annually since 2016, including budget support.

So far, the Manila-based lending agency has committed $31.8 billion in loans, grants, and technical assistance to 726 government sectors in Bangladesh.

Currently, ADB's sovereign portfolio in Bangladesh includes 75 loan and four grant projects worth $13 billion.

Meanwhile, along with $500 million in budget support, the World Bank has also extended a $400 million loan to Bangladesh for another project.

The global lender's board approved loans totalling $900 million last Friday, which will be spent on reform programs in Bangladesh's revenue and finance sectors under budget support.