Bangladesh pledges faster project delivery to secure $10b in WB loans

The additional funding will cushion the economy against global shocks by financing critical energy and fertiliser subsidies.

Bangladesh has pledged to slash project implementation timelines for World Bank-funded initiatives from seven years to five and streamline the approval process from 18 months to just eight, as it seeks to secure $10 billion in additional loan assistance over the next three years.

Finance Minister Amir Khosru Mahmud Chowdhury informed the multilateral lender that the government is aiming to compress the approval window even further, down to five months, to accelerate development delivery.

The commitments were made during a high-level meeting in Bangkok between a Bangladeshi delegation led by senior government policymakers and World Bank Managing Director Anna Bjerde. As part of the discussions, the World Bank agreed to finalise its Country Partnership Framework with Bangladesh by June 2027.

Speaking to reporters following the talks, Khosru expressed satisfaction with the trajectory of negotiations, noting that the World Bank remains fully aligned with Bangladesh’s broader economic policies and medium-to-long-term development plans. However, he cautioned that negotiations over the $10 billion package remain ongoing and could take several months to wrap up.

Coordinated support from World Bank and IMF

Senior government officials present at the meeting told The Business Standard that both the World Bank and the International Monetary Fund (IMF) have responded positively to Bangladesh’s requests for assistance. Alongside the World Bank talks, the BNP-led government has proposed borrowing $4.5 billion from the IMF under a new loan programme.

“Both institutions are setting conditions across various areas, including banking sector reforms and enhanced revenue collection,” a senior government official said. “Discussions are currently under way to coordinate and harmonise these reform requirements to prevent overlapping conditions.”

If secured, the additional funding will cushion the economy against global shocks by financing critical energy and fertiliser subsidies, securing essential imports, recapitalising banks, and strengthening overall financial sector resilience.

Four priority pillars underpin $10b proposal

The government’s request for additional financing rests on its newly drafted Resilience and Reform Investment Programme, which outlines four key priority pillars:

1. Trade Financing: Securing essential imports, particularly energy and fertiliser supplies.
    
2. Trade Facilitation: Supporting micro, small, and medium-sized enterprises (MSMEs).
    
3. Financial Governance: Driving deep reforms across the banking and financial sectors.
    
4. Economic Resilience: Enhancing macroeconomic capacity to absorb external shocks.
    

The proposal follows a high-level meeting between Prime Minister Tarique Rahman and World Bank President Ajay Banga on the sidelines of the UN General Assembly in New York last month. The formal framework was presented to World Bank officials in Bangkok on Monday.

Describing the effort to secure aid under this framework as “unprecedented in Bangladesh’s history,” the finance minister confirmed that written proposals and initial recommendations have been exchanged between both sides.

Focus on private investment, tax automation, and job creation

The World Bank’s reform agenda for Bangladesh places heavy emphasis on private investment and job creation. Key priorities include tackling high non-performing loans (NPLs), reforming state-owned enterprises, and restoring health to the banking system to reignite economic momentum.

The Bangladeshi delegation highlighted several immediate steps already under way to restore market confidence:

• Banking Sector Restructuring: Initiatives are in motion to recapitalise banks and protect depositor confidence, including joint interventions with the International Finance Corporation (IFC), the World Bank’s private-sector arm. Visible cleanup measures have already commenced in targeted institutions.
   
• Capital Market Oversight: An independent, professional securities commission has been instituted, replacing the previous political leadership model. Eased regulatory barriers have renewed interest among institutional fund managers across New York, London, and Hong Kong, with progress on a Hong Kong-based equity fund advancing rapidly.
   
• Tax Administration Reforms: In line with longstanding recommendations from the IMF and World Bank, revenue policy formulation has been completely separated from tax administration. Furthermore, full automation of tax processes is being rolled out to boost the national tax-to-GDP ratio.