Dhaka, Bangladesh – June 20, 2025 – The Government of Bangladesh and the Asian Development Bank (ADB) today formally signed four loan agreements totaling US$1.304 billion. These significant funds are earmarked to modernize critical infrastructure, bolster financial systems, and accelerate Bangladesh’s efforts to enhance climate resilience.
The agreements were signed by Md. Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD), Ministry of Finance, and Hoe Yun Jeong, Country Director, Bangladesh Resident Mission, ADB, on behalf of their respective organizations. Senior officials from both the Government of Bangladesh and the ADB were present at the signing ceremony.
The newly signed loan agreements are set to bring tangible improvements across several key sectors:
1. Banking Sector Reforms ($500 million budget support): This loan for the “Stabilizing and Reforming the Banking Sector Program-Subprogram 1” will fortify financial stability through structural improvements aimed at ensuring stronger credit systems to fuel economic growth. Developed by the Finance Division, the program will be implemented by the Finance Division, Bangladesh Bank, and the Financial Institutions Division. Its two major policy reform areas are: * Maintaining the financial sector’s stability and resilience amidst ongoing economic challenges. * Implementing structural reforms to ensure banks are well-positioned to provide credit for economic growth. This loan is repayable in 15 years, including a 3-year grace period, with an interest rate of SOFR+0.5%.
2. Climate-Resilient Inclusive Development ($400 million budget support): This funding will reduce Bangladesh’s vulnerability to climate shocks through the “Climate Resilient Inclusive Development Program-Subprogram 2.” The program will be implemented by a wide range of government bodies, including the Finance Division, Programming Division-Planning Commission, Bangladesh Bank, Ministry of Water Resources, Power Division, Road Transport and Highways Division, Ministry of Disaster Management and Relief, Ministry of Railways, Planning Division, Local Government Division, Ministry of Environment, Forest and Climate Change, and Ministry of Agriculture. The major policy reform areas under this program are: * Facilitating a sustainable and climate-focused development pathway. * Strengthening resilience and reducing risk and vulnerability to the adverse impacts of climate change. * Mitigating greenhouse gas emissions and transitioning to a low-carbon economy. This loan is repayable in 25 years, including a 5-year grace period, with an interest rate of 2%.
3. SASEC North West Corridor Phase 2 (Tranche 4 – $204 million): This tranche of funding will be utilized to improve regional connectivity along the Elenga-Hatikumrul-Rangpur road. With this fourth tranche, ADB’s total investment in this critical corridor will reach $1.2 billion since 2017. The project is being implemented by the Roads & Highways Department under the overall supervision of the Road Transport and Highways Division. The loan is repayable in 25 years, including a 5-year grace period, with an interest rate of SOFR+0.5%.
4. Energy Modernization Program ($200 million): This program aims to revolutionize Bangladesh’s power grid through the upgrading of nine substations and the construction of 141 km of new transmission lines. It will also create pathways for the integration of renewable energy from Southern Chattogram. Power Grid Bangladesh PLC will implement this “Power Transmission Strengthening and Integration of Renewable Energy Project” until June 2030. The loan, signed under the ADB’s Ordinary Operations, is specifically aimed at improving the quality, reliability, and efficiency of Bangladesh’s power supply system. Key components of the project include: * Modernizing power infrastructure. * Renewable energy integration. * Institutional capacity building. The loan carries a 25-year repayment period with a 5-year grace period and an annual interest rate based on SOFR +0.5%.
The ADB, founded in 1966, is a leading multilateral development bank committed to supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. It works with its 69 members (50 from the region) and partners to address complex challenges through innovative financial tools and strategic partnerships.
*
Email *
Website
