ADB, World Bank approve $1.54bn loans for Bangladesh

The Asian Development Bank (ADB) and the World Bank (WB) have approved a combined loan of $1.54 billion for Bangladesh to support banking sector reform, enhance climate resilience, improve air quality, and ensure energy security.

The ADB will provide $900 million for two initiatives -- $500 million to strengthen the banking sector and $400 million to support climate-resilient and inclusive development.

The World Bank has sanctioned $640 million for two separate projects -- $350 million for the energy sector and $290 million to improve air quality.

The ADB’s board of directors approved the loans during a meeting held at its headquarters in Manila on Thursday.

On the same day, the World Bank’s executive board approved its portion of the support.

According to an ADB media statement the $500 million for the banking sector aims to promote stability and transparency in Bangladesh’s financial sector.

The programme is expected to stabilise and reform the banking sector by strengthening regulatory supervision, corporate governance, asset quality, and financial stability, it added.

The ADB said the $400 million loan -- for climate-resilient and inclusive development -- will be utilised to facilitate access to climate finance, establish the Bangladesh Climate Development Partnership, and develop a comprehensive disaster risk financing strategy.

The World Bank, in a separate statement, said the Energy Sector Security Enhancement Project ($350 million) will help improve gas supply security by facilitating access to cost-effective financing for Petrobangla, the state-owned oil and gas company.

The project will utilise a guarantee from the International Development Association (IDA) to mobilise up to $2.1 billion in private capital over seven years for new liquefied natural gas (LNG) imports.

The IDA is the World Bank Group’s lending arm that provides concessional loans and guarantees longer loan tenures.

The other project is the $290 million “Bangladesh Clean Air” project.

Under this World Bank project, new and improved stations will be established for the Department of Environment to better monitor and control air quality.

In addition, the project will also monitor major sources of air pollution.

Under the project, a fleet of 400 zero-emission electric buses will be introduced. In addition, mobile inspection centres and specialised testing kits will be provided to measure pollution levels from other vehicles in the city.

These interventions are expected to reduce PM2.5 emissions by nearly 2,734 metric tonnes per year.