ADB approves $400 mn loan to Bangladesh for economic reforms

This loan represents the second subprogramme of ADB's Sustainable Economic Recovery Program, which was initiated in October 2021 to facilitate the country's post-pandemic economic revival, ADB said in a press release.

A key component of the programme is the enhancement of income tax collection through the implementation of a new Income Tax Act, aimed at closing tax loopholes, strengthening compliance and enforcement measures, and expanding the country's tax base. Furthermore, efforts will be directed towards improving transparency and efficiency in public procurement by bolstering electronic procurement and payment systems. The newly launched digital system for public project appraisal and approval processes will streamline project approval procedures.

The loan package also supports the innovative financing services initiated by Bangladesh Bank, which provide low-cost microcredit through commercial banks via digital channels and e-wallets. This initiative will enable marginalised and landless farmers, small traders, and low-income earners to access bank lending. Additionally, micro and small businesses, as well as women entrepreneurs without property collateral, will be able to obtain finance based on trade receipts and other non-fixed collateral, such as small equipment and machinery.

Promoting gender equality, social inclusion, and addressing the climate change agenda in public investment and national budgeting are key areas of focus within this comprehensive programme.

“This subprogramme enables Bangladesh to enhance revenues, promote efficiency and transparency in public spending and public procurement, deepen the reforms of state-owned enterprises, and help small businesses and microentrepreneurs to access low-interest affordable credits from the banking sector,” said Aminur Rahman, ADB’s principal public management economist for South Asia. “The subprogramme, with a strong focus on gender, climate change, and digitisation, enables the government to strengthen its efforts to support income generation for the poor and vulnerable.”

Fibre2Fashion News Desk (DP)