The Asian Development Bank on Wednesday said that it approved $600 million ‘policy-based loan’ to Bangladesh.
The loan will be used for bringing structural reforms supporting domestic resources mobilisation, enhance efficiency of public investment projects, developing private sector, reforming state-owned enterprises, and promoting transparency and good governance, according to a release by the Manila-based multilateral lender.
ADB’s policy-based loan promptly responds to Bangladesh’s immediate development financing needs following the political transition, said the lender’s regional lead economist Aminur Rahman.
This particular loan programme of the ADB has been developed in close collaboration with the International Monetary Fund, World Bank, and other multilateral lenders after the interim government led by Muhammad Yunus sought extra funds from them to tackle the lingering economic crisis, mostly left behind by the Awami League regime ousted on August 5 amid a student-led mass uprising. Â
Reportedly, the Finance Division also expects to receive another around $1.5 billion loan as budget support from the International Monetary Fund and World Bank by the next two months.  Â
The ADB said that Bangladesh had been struggling with revenue mobilisation, as it possessed the world’s lowest tax-to-gross domestic product ratio at only 7.4 per cent.
This loan will help Bangladesh to introduce key policy actions with the aim of increasing domestic resource mobilisation, while improving transparency and accountability, according to the release.
The ADB loan programme includes digitalisation and green initiatives, rationalisation of tax incentives and exemptions, and measures to assist taxpayers to boost tax morale.
Improved transparency and efficiency of public investment projects through increased digitalisation is another key objective of the loan programme.
The loan will promote private sector development and foreign direct investment by streamlining regulatory environment and creating a level playing field.
To simplify business creation and operations, over 130 services have been made available in an online integrated platform. These are complemented by improved governance and performance monitoring of state-owned enterprises and streamlined foreign direct investment approval processes, according to the release.