ADB supports Bangladesh’s economic recovery

The Asian Development Bank (ADB) has approved a $400 million loan to Bangladesh to drive reforms in domestic resource mobilization, improve the efficiency and productivity of public spending, and help small businesses, especially those run by women, access innovative low-cost bank financing cost.

This loan is the second ADB subprogram of the Sustainable Economic Recovery Program launched in October 2021 to support the economic recovery after the COVID-19 pandemic.

“This sub-program enables Bangladesh to increase revenue, promote efficiency and transparency in public spending and public procurement, deepen reforms of state-owned enterprises, and help small businesses and micro-entrepreneurs access affordable, low-interest credit from the banking sector,” said ADB Senior Governance Economist for South Asia, Aminur Rahman.

“The subprogramme, with a strong focus on gender, climate change and digitization, allows the government to strengthen its efforts to support income generation for the poor and vulnerable.”

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The program will improve income tax collection through the adoption of the new Income Tax Law, reduce tax loopholes, strengthen compliance and enforcement measures, and expand the country’s tax network.

The transparency and efficiency of public procurement will be improved through the strengthening of electronic procurement and payment systems, while the approval of public projects will be facilitated through the newly launched digital system for evaluating public projects and the approval process.

The new package supports the Bangladesh Bank’s launch of innovative financing services through commercial banks to provide low-cost microcredit using digital channels and e-wallets. It facilitates the granting of bank loans to marginalized and landless farmers, small traders and people with low incomes.

Micro and small businesses and women entrepreneurs who do not own land or property will also be able to access financing based on their trade receipts and other forms of non-fixed collateral, such as small equipment and machinery.

Promoting gender equality and social inclusion and addressing the climate change agenda in public investment and national budgets are some of the key activities of this new programme.